Graciela ChichilniskyColumbia University

May 8 2008

A global market mechanism must create economic incentives for Sustainable Development

‘Price signals’ and market solutions Encouraging human activity that creates wealth and

welfare And is harmonious with the environment

A Successful Global Market Mechanism:

The ‘Carbon Market’ of the Kyoto Protocol

◦ Carbon Price signal - rewards carbon reduction & penalizes excessive emissions

◦ Self funded - requires no donations to execute◦ Reduces the gap between the poor and the rich

nations – the Global Divide (Article IV of 1992 Climate Convention)

◦ In 2006 CDM executed $9 billion in transfers for productive investment in developing nations reducing 30% EU annual emissions

A successful Global Market Mechanism must satisfy these four operating principles:

◦ 1. Foster Sustainable development

◦ 2. Be Self funded - requires no donations to execute

◦ 3. Reduce the gap between the poor and the rich nations – the Global Divide

◦ 4. Transfer productive resources to lowest income communities

Aggregates the services of large numbers of watersheds across the world, bundled into one global financial asset: global watershed services

Public-Private corporation owns rights to watershed services with strict covenants. Sells bonds and equity to be self funded

Public - Private corporation owns and profits from the savings created by using ecosystem services rather than artificial plants to capture and filtrate water destined to cities >1 million population

Corporation, land & resources owned by local communities Covenants to restrict and manage residential, commercial

and agricultural use of watersheds Financial asset (bonds, equity of corporation) sold in the

global capital markets – Water Hedge Funds – IPOs and secondary markets.

Aggregates the services of large numbers of forests across the world, bundled into one global financial asset: global prospecting services

Public-Private corporation owns rights to forest biodiversity services with strict covenants. Sells bonds and equity to be self funded

Public - Private corporation owns and profits from bio prospecting services (Costa Rica’s example)

Corporation, land & resources owned by local communities

Covenants to restrict and manage residential, commercial and agricultural use of forests

Financial asset (bonds, equity of corporation) sold in the global capital markets – Forest Hedge Funds – IPOs and secondary markets.

Digital Data Base to avoid permanent loss of verbally transmitted indigenous knowledge

Indigenous knowledge threatened by the segmentation of traditional communities & encroachment of industrial societies.

Data Base records original source & ensures licensing revenues Replacing patents by compulsory licenses Knowledge owned by the originating sources – Public Private

Corporation sells knowledge services to private sector. Medicinal knowledge alone represents $100 billion in annual

sales for pharmaceutical companies Data base development encourages digital training and job

creation for indigenous youngsters, mentored by communities elders

Bonds and Shares in Public - Private corporation are sold in global capital markets, IPOs.

Knowledge owned by communities, Public – Private corporation owns rights to sell services from indigenous knowledge.

Creation of property rights for the global spectrum

Owned by each nation within its territory Create Private-Public corporation(s) to

exploit the services of the global spectrum Owned as appropriate by local

communities, with bonds and shares sold in global capital markets

Developing nations (e.g. Latin America) are the largest expansion market for wireless services in the world today

Chichilnisky, G: Development and Global Finance: the case for an International Bank for Environmental Settlements UNDP and UNESCO, New York 1996, in ww.chichilnisky.com - publications