In Carbon Credit markets, project implementers create carbon emission mitigation projects, and buyers, either environmental philanthropists, or organizations wanting or regulated to mitigate their climate impact buy verified impact credits, called carbon credits. A balance between supply and demand sets the “price” of buying impact, and buyers try to maximize impact per dollar by minimizing the price they pay per credit.
Acknowledging that carbon credit markets have a whole host of problems, they still seem to be an interesting mechanism for “buying impact” and by being market based, they create incentives to minimize barriers to entry for both buyers and sellers. And competition should encourage cost-minimization or impact maximization.
So do you have an opinion on why EA has not yet succeeded in creating a version of an “Impact Credit” market for expanding and incentivizing impact-based philanthropy? I can imagine a few possibilities. Here are some that come to mind:
(1) It is just too hard to accurately characterize impact accurately at the project level so the focus is on charity-wide impact evaluation and quantification.
(2) Attribution of impact cannot be realistically done at the project level, it has to be done at the charity level.
(3) An open market will encourage cheating and the EA community does not have the resources to police the potential cheating and corruption.
(4) There are too many types of impact that EAs are interested in, and because EAs focus on neglected cause areas, you can’t really create Impact Credits for a neglected area because that puts the “cart before the horse.”
(5) Maybe it is a good idea and the EA community just hasn’t gotten around to seriously or successfully trying it yet.
(6) Maybe if there is too much money going into “Impact Markets,” by the laws of supply and demand the cost of impact will go up for the donors, and the impact cost effectiveness will go down. Therefore EA donors get much more “bang for the buck” by being exclusive, raising requirements on donors, charities and projects so that their more limited, exclusive projects can have higher cost effectiveness, than what might be possible at larger scale. Do we really want Malaria bednets to get $20,000 per life saved instead of $5,000 per life saved so that Malaria bednet charities have an incentive to lower the average bed net distribution cost-effectiveness? If the market price for impact is $20,000 when a focused program can deliver $5,000 per life saved, then the bednet charities have an incentive to expand and lower their cost-effectiveness by 4X by distributing bednets to people who really don’t need them.
I am sure that there are many more possible answers.
In Carbon Credit markets, project implementers create carbon emission mitigation projects, and buyers, either environmental philanthropists, or organizations wanting or regulated to mitigate their climate impact buy verified impact credits, called carbon credits. A balance between supply and demand sets the “price” of buying impact, and buyers try to maximize impact per dollar by minimizing the price they pay per credit.
Acknowledging that carbon credit markets have a whole host of problems, they still seem to be an interesting mechanism for “buying impact” and by being market based, they create incentives to minimize barriers to entry for both buyers and sellers. And competition should encourage cost-minimization or impact maximization.
So do you have an opinion on why EA has not yet succeeded in creating a version of an “Impact Credit” market for expanding and incentivizing impact-based philanthropy? I can imagine a few possibilities. Here are some that come to mind:
(1) It is just too hard to accurately characterize impact accurately at the project level so the focus is on charity-wide impact evaluation and quantification.
(2) Attribution of impact cannot be realistically done at the project level, it has to be done at the charity level.
(3) An open market will encourage cheating and the EA community does not have the resources to police the potential cheating and corruption.
(4) There are too many types of impact that EAs are interested in, and because EAs focus on neglected cause areas, you can’t really create Impact Credits for a neglected area because that puts the “cart before the horse.”
(5) Maybe it is a good idea and the EA community just hasn’t gotten around to seriously or successfully trying it yet.
(6) Maybe if there is too much money going into “Impact Markets,” by the laws of supply and demand the cost of impact will go up for the donors, and the impact cost effectiveness will go down. Therefore EA donors get much more “bang for the buck” by being exclusive, raising requirements on donors, charities and projects so that their more limited, exclusive projects can have higher cost effectiveness, than what might be possible at larger scale. Do we really want Malaria bednets to get $20,000 per life saved instead of $5,000 per life saved so that Malaria bednet charities have an incentive to lower the average bed net distribution cost-effectiveness? If the market price for impact is $20,000 when a focused program can deliver $5,000 per life saved, then the bednet charities have an incentive to expand and lower their cost-effectiveness by 4X by distributing bednets to people who really don’t need them.
I am sure that there are many more possible answers.