Environmental Rights on the Futures Markets: An Application to the Dutch Manure Market
Posted: 26 Oct 1999
A study was carried out to analyze futures markets for tradable rights after a cash market was initiated. Futures markets can play a role in solving environmental problems by making the market for pollution rights (i.e. P2O5 rights) and agro rights (milk rights, sugar rights and P2O5 rights)more effective and transparent. Moreover, the market for tradable rights would be able to meet the users' need for hedging. This paper investigated the possibility of introducing a futures markets of tradable P2O5 rights and the commodity manure. Because there is already a cash market for manure, although not well-developed yet, and there will be a cash market for P2O5 rights, a futures market is a logical sequel. The futures market can play a role in implementing agricultural policy efficiently, and with respect to manure and P2O5 rights, can be an economically efficient solution to environmental problems.
JEL Classification: G13
Suggested Citation: Suggested Citation