Kuta Beach

Kuta Beach

Thursday, 18 March 2010

Carbon Offset with Land Banks

In life one can be selfish, but most people recommend that a person tries to be altruistic and help others. An individual can help other people monetarily e.g. by giving money to a poor person. Another form of altruism is improving the environment because it prevents or mitigates an environmental disaster, which benefits other people (e.g. future generations).

Many people accuse me of be environmentally unfriendly because I tend to use the printer a lot (instead of reading documents on the screen) and I tend to have long showers. One way I can show to others and to myself that I am environmentally friendly is to buy carbon offsets. There are many companies that allow you to purchase carbon offsets, but I believe that many people view this with skepticism. After all, if you pay $100 to some company and they promise to offset a certain amount of carbon, it may be difficult to know if they actually did it or not.

It would be good if a company existed that allowed me to land bank and carbon offset at the same time. When I register with this company, they open up an account, and I transfer money to this company often, e.g. $100 per fortnight. Whenever I send money to this company, they allocate a certain portion of land in the country for me and for a low cost (e.g. $1) they plant a tree there. What is important for this idea to really work is that the customer must actually legally own the land, that is have legal title to the land and the tree. This allows the customer to use this scheme as if it were a mutual fund or a bank account. Therefore, as the customer offsets carbon, he or she will also be holding assets that may appreciate in value. This I think will increase demand for the these services.

One potential problem is that when a customer is young he or she may be enthusiastic about improving the environment and plow money into his own land bank, which results in him buying up many acres of land in the country. However, when he is older, the monetary reality of retirement may force him to sell the land because he desperately needs more money to fund his retirement. He may sell his land to a developer who may cut down the trees and put accomodation (or something else) there. But this may indeed happen, I think that the net effect of this scheme is good because if you plant 100 trees and, say, 30 of them are destroyed for private development, you still have 70 trees that absorb carbon emissions, so 70 trees planted is better than zero trees planted. What a person does with his own property is his own business.

The value of the land that a person buys will depend on many factors, the most important factor of which is whehter the council or local government gives approval for owners to build profitable businesses on that land, e.g. a restaurant, a hotel, an investment home, etc. If the local government only allows the land owner to use the land for e.g. planting crops, its value may not be as high than if e.g. the local government allowed the owner to build a hotel there. There is then a tradeoff between the value of the land and how environmentally friendly the whole scheme will be because the higher the value of the land, the more tempting it is for land owners who buy land for the purpose of offset carbon to cash in once the total value of their assets grows significantly.

If land is sold to customers in small one-meter-by-one-meter blocks, it would be very difficult for private developers to use that use to build profitable enterprise because usually something profitable like a hotel needs a lot of land. The private developer may need to buy land off hundreds of land owners before it has enough surface area to be able to build a hotel, and gaining consent from all of these hundreds of land owners may be difficult because, even if many of them may be tempted by the developer's offer of cash, some may refuse not only for environmental reasons but also because they may think that if they refuse they will get a higher offer in the future. Hence a good way to prevent land from being developed is to divide it into small parts and to sell them off randomly to multiple buyers. Subdivision of land will be subject to government approval.

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