Regulation as Corruption in the Carbon Offset Markets
Cowboys and Choirboys United

by Larry Lohmann

first published 8 June 2009

The civics-class formula 'no matter what the market, it will always be possible to regulate it' is not a useful principle for constructive social action in the real world. In markets that cannot distinguish between fraud and non-fraud, that undermine the rule of law, and that are based on conflict of interest, attempts at regulation can be worse than useless. "Governance" itself becomes part of corruption.

The carbon offset market is one such market; the market for complex credit derivatives is another. Both these markets, argues this draft chapter for a forthcoming book on carbon trading in Africa from Cape Town's Institute for Security Studies, should teach us the need for new, more nuanced and practical approaches to issues of corruption and regulation.