This paper, examine why markets are being widely proposed to address environmental problems and manage natural resources, give some background on their history, and speculate on their future.
Markets are increasingly being used and proposed as a way to address environmental problems and manage natural resources. Functioning markets exist for water rights and sulfur dioxide credits can even be purchased via the Internet. Markets are being developed for trading water quality credits, greenhouse gas emissions, and many other environmental services. In this paper, I examine why such markets are being widely proposed, give some background on their history, and speculate on their future. The other papers in this Choices theme provide an overview of what is really happening "on the ground," discussing how well the promise of these new markets has been met in reality.