Clean water is a luxury for one billion people now. Most of the world’s poorest have little access to clean water. They must boil their water to remove the harmful bacteria, viruses and parasites that otherwise cause disease.
That means that they must cut down trees, which worsens deforestation and drought, increasing the chances for mudslides, or burn fossil fuels, worsening the climate change that is already robbing them of adequate water.
But, as Tina Rosenberg of the New York Times argues: this provides an excellent example of the kinds of intractable problems that the free market cannot solve, but carbon markets can. Vestergaard Frandsen – that sells its LifeStraw to NGOs helping the poor purify water – is about to become a viable business, thanks to carbon offsets.
The LifeStraw is a low tech but effective water purifier that uses filters to trap virtually all bacteria, viruses and parasites from even the dirtiest water. The original was a straw, that you suck on to activate. A newer larger version; the LifeStraw Family uses gravity instead of suction. You hang it on a wall, and pour local water in the top, open the tap at the bottom, and clean water comes out.
Businesses like Vestergaard Frandsen struggle, despite having invented a truly lifesaving product. There is no viable business model for providing goods and services for people who do not have the money to buy it.
But, using carbon offsets, the business model changes. The company is about to receive funding from one of the carbon credit markets in February, which will enable it to open shops throughout Kenya to keep Kenyans supplied over time with their products, for free. The more business it does, the more carbon credits it is awarded, and the more money it makes.
Through the global carbon market, established after the Kyoto Protocol, a price is placed on pollution. Polluters must invest in pollution reduction technology. If they cannot do it within their own business, then they can offset their pollution by paying for projects that auditors certify will reduce greenhouse gases elsewhere.
The idea is that the globe is one big source of greenhouse gases, and if a polluting company cannot reduce their own pollution, that they can be required to pay someone else to reduce an equivalent amount elsewhere.
Typically, renewable energy projects like huge wind farms in China or India have been the beneficiaries of carbon offsets, based on how many kilowatt hours of coal they can displace.
But here is an example of carbon credits being used to ameliorate one of the effects of climate pollution itself, which is the ever diminishing water supplies in areas prone to desertification, and the associated increased burning of fossil fuels to clean water.
By eliminating the need to burn fossil fuels to clean the water for the world’s poorest people, the carbon offset has reduced greenhouse gases.
Image: Idea Exchange
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