The New Green Game

Giant multinational corporations aren't often seen as saviors of the rain forest. But this past May an American environmental nonprofit called The Nature Conservancy persuaded General Motors to part with $10 million for rebuilding a Brazilian rain forest devastated by water-buffalo ranching. GM's money will ensure that trees are replanted, and that what remains of the forest is preserved. While GM says its main motivation for this project was to "restore and preserve" the rain forest, the company also had one eye on the fast-developing global market in tradable pollution allowances. If the market develops as both economists and business executives expect, the automaker could eventually receive credits for the carbon dioxide that the new forest will absorb over the next 40 years. GM might then be able to use those credits to offset some of its own CO2 emissions, allowing it to meet targets for reducing the greenhouse gases that most environmental scientists say are responsible for global warming.

Market-based incentives are not new to environmental policy. The U.S. Environmental Protection Agency sponsors a number of tradable permit systems, in areas from the sulfur-dioxide pollution that creates acid rain to the production of ozone-depleting chlorofluorocarbons. "The ... // 74% Remaining