Markets for the environment
Market mechanisms and financial tools are frequently maligned for the negative environmental outcomes they can lead to. But markets and financial instruments can also play an important role in solving environmental problems. In this line of research, I (and sometimes in conjunction with excellent colleagues and students) am examining various market mechanisms that actually contribute to positive environmental outcomes. These include examinations of New Jersey’s Pinelands Development Credit program; an exploration of the potential for derivatives to revitalize markets for post-consumer recyclable materials; and consideration of the many ways in which tools for “green” and “conservation” finance can impact the planet in positive and lasting ways.
NJ Pinelands Development Credit program:
The PDC program employs a market mechanism to help property owners exchange some of their land development rights for cash, while simultaneously entering tracts of land into permanent protected status. The PDC program, run by the Pinelands Development Credit Bank and the New Jersey Pinelands Commission, is one of the most successful ‘transfer of development rights’ programs in the world. Read more in the following publications:
Howell, Jordan P., Mahbubur Meenar, Christina Friend, Jack Kelly, and Owen Feeny. 2022. The Pinelands Development Credit Program: Using Market Mechanisms to Achieve Preservation Goals. Case Studies in the Environment 6. You can download a “pre-print” copy here — just be sure to cite the full article as it appears on the Case Studies in the Environment website.
Howell, Jordan P. and Zachary Rouhas. 2024 est. “Markets for Preservation: The Pinelands Development Credit Program.” In New Jersey’s Natures, Raechel Lutz, ed. New Brunswick: Rutgers University Press.
Exchange-Traded Derivatives and Recycling Markets:
While most folks have heard of recycling and understand the environmental potential, the reality in New Jersey and many places around the world is that huge volumes of material still flow to landfills and incinerators. We believe that one reason for this state of affairs is the market for recyclable materials itself, which lacks a system for pricing and transacting that is the hallmark of many other types of commodities. We propose, and demonstrate the value of, exchange-traded derivatives (e.g, futures contracts) for recyclable materials and markets on which they would trade. This project was supported by the New Jersey Dept. of Environmental Protection Recycling Enhancement Act. You can find much more info on our project website including access to much of the content below:
Moore, Jordan, Jordan P. Howell, and Daniel Folkinshteyn. 2022. The Potential for Exchange Traded Futures on Recycled Materials to Improve Recycling Efficiency. Investment Management and Financial Innovations 3.
Howell, Jordan P., Jordan S. Moore, and Daniel Folkinshteyn. 2021. “Enhancing Markets for Post-Consumer Materials through Derivatives: Connecting New Jersey Recycling Programs to the Broader Market.” Project white paper.
Howell, Jordan P., Jordan S. Moore, and Daniel Folkinshteyn. 2021. A Better Market Mechanism? Resource Recycling Magazine December print edition, pp. 30-32.