The ecological stock: A financial market instrument for global scale climate change mitigation

Abstract

This financial market instrument first addresses the issue of global risk: the combined world economic, political, and social risks that are rapidly resulting from the unparalleled planetary environmental degradation and climate change. It provides evidence that global risk can be reduced with investments in forest preservation, reforestation, and renewable energy. Furthermore, it shows that in order to achieve the urgently needed global scale climate change mitigation and neutralization, new massive capital investments can be stimulated and, thereby, shifted, through the profit motive utilizing financial product innovations in the free market system with the active participation of the private sector. The Ecological stock is a certifiable and tradable innovative instrument that incorporates features of a corporate stock, a commodity, a derivative, and a perpetuity. It aims at developing a world financial market for emissions and environmental services trading by creating financially feasible investments in the following areas: (a) forest conservation and reforestation, (b) renewable energy, (c) CDM projects, and (d) foreign debt swaps for poor and developing countries. The investor acquires certified Ecological stocks as a registered security in the national exchange of host (poor, developing, or industrialized) country project and in the international exchanges, with rights to profit and capital gains as well as rights to the certified GHGs emission reductions and the environmental products of the project (carbon sink, water conservation, biogenetics, soil fertility, and global warmth reduction). The shareholder becomes, then, the ecological owner of a specific project. One of its goals is turning the CDM model of the Kyoto Protocol into a new global financial industry under a voluntary scheme as well as under the protocol, using the Ecological stock in the exchanges to motivate the participation of ALL nations through profitability-economic democratization of climate change mitigation and neutralization-so as to mitigate climate change beyond a carbon neutral world and beyond global emission reductions in order to start restoring equilibrium in the planetary ecological system, hence, the climate.