Saving The Planet Requires an Incentive Shift
Most of our efforts to stop climate change and improve the conditions here on earth have been focused on raising awareness in hopes that it will spark the political and social changes that are necessary to save the planet. We have protested and debated and warned about potential doomsday scenarios for years, but issues about the environment are still not being prioritized by politicians, media or the general population.
Sadly, most people in most of the world have immediate concerns about their own food, shelter and financial security, which makes it hard to focus on problems like climate change because they seem more distant and abstract than surviving through the week.
Large corporations and governments have no interest in changing things either, because they are responsible for a large portion of the pollution we see in the world, and the products of that pollution is where they get much of their power from.
Major corporations are able to add to their bottom line by polluting the environment instead of using cleaner products or disposing of waste properly, and governments protect their territories with carbon-intensive militaries and weapon testing.
In other words, everyone has an incentive to keep things the way they are, and this is why we see very little meaningful change. Having the moral high ground or being scientifically correct is not enough to persuade people to change, people need to see a direct and immediate benefit for themselves in order to change their actions.
Of course there are always outliers and extenuating circumstances, but trying to change people’s minds is nearly impossible without changing their conditions and incentives.
It doesn’t matter who you are, or how philosophically pure you think you are, when you are presented with a choice, your mind will do whatever mental gymnastics it needs to do to arrive at a result that has the best outcome for your self preservation. Even if you don’t think this happens, it does on a subconscious level.
We see this in politics all the time. People might have lofty and moralistic reasons for their beliefs, but their beliefs always line up with their own interests.
This is especially true when it comes to nature, it’s something that people really should care about, but there are more incentives for us to destroy and disregard nature than there is to preserve and renourish it. It would be nice to have everyone care for all of the right reasons despite other conditions, but that’s not a realistic expectation.
In addition to the obvious benefit of saving life on the planet, there are also unseen financial benefits that will come from preserving nature as well.
We could see an abundance of resources and economic boom thanks to renewable energy, or improved quality of health and lower healthcare costs due to cleaner air, but people need to see these results first, which is why carbon markets are here to bootstrap the process.
Things would be different if people could make an income, or businesses could add to their profits by preserving and replenishing nature. This would flip the incentive structure on its head, from degenerative to regenerative.
As it stands today, in most cases, nature is only valuable if it is destroyed and packaged for mass consumption, but it doesn’t have to be that way. We can build markets that actually place a value on the most valuable resources on our planet, without the need to extract or destroy those resources.
This is the type of incentive structure that we are hoping to create with carbon markets, but placing a financial value on nature is a controversial idea, even among those of us who really care about the planet.
It seems like a sort of heresy to put a price on ecosystems, after all, isn't that the thinking that got us into this mess in the first place? Not exactly.
Every single individual aspect of an ecosystem is financialized, this much is true, but the ecosystem itself is not recognized as having any value.
Resources are pillaged from pristine ecosystems and sold to the highest bidder, and our commons are polluted to save money on waste removal.
Nature is already financialized because it can be bought, sold and excavated, but it is not actually valued because there is no price for keeping it intact. The fact that there is a price for destruction and not preservation means that there is only one product on the market — destruction.
This is slowly starting to change with the growth of carbon markets, as money is finally starting to flow to vital ecosystems and the communities that preserve them, but there are challenges, and like any new venture, there is plenty of room for improvement.
We believe that some of the biggest challenges are transparency, liquidity and risk analysis. This past year there have been many high profile stories and investigations that have proven these are key areas of weakness in our current carbon markets.
We will dive more into this in a future article…
About Solid World DAO
Solid World makes forward carbon credits liquid by creating liquidity pools and capital markets to solve global supply issues in a market set to grow 50x by 2030.
Corporations use carbon projects to reach net-zero emissions. Sustainability commitments globally are driven by strong investor pressure. There’s a total of $700B funding gap by 2030 to sufficiently protect our nature. Finding high-quality inventory is increasingly difficult, with global sequestration supply reducing by 24% in 2021 Q4. Participating in forward financing markets is especially difficult unless you specialize in the field.
Solid World disrupts these issues by offering 24/7 liquidity, diversification, guaranteed delivery, and transparent prices. Solid World pays an average of 12% APR and gives exposure to high-quality offtake agreements (+30% YoY last 5 years).
Projects are subject to rigorous due diligence (many of our staff have worked with BeZero) and are certified by reputed registries, including Verra.
We work with some of the largest carbon trading houses and investors, such as SCB, Vlinder, and Allcot. Backed by Tier-1 VCs like Greycroft and Taavet+Sten. Team has combined 20+ years of carbon experience.
