Risky business

The research paper 'Risky business' by the World Resources Institute outlines three risk-management principles to ensure the stability of the international market for greenhouse gas emissions rights, drawing lessons from the 1997-98 Asian financial crisis to avoid similar market failures.

• The author argues that an international market for greenhouse gas emissions rights requires regulatory frameworks based on sound risk-management principles, citing the 1997-98 Asian financial crisis as evidence that liberalized financial markets depend on such frameworks.
• The paper identifies three specific risk-management principles for the emissions market: establishing transparency and disclosure rules based on Kyoto Protocol and IPCC standards; sequencing regulatory policies so that legally binding eligibility requirements are in place before large-scale international capital flows; and avoiding perverse incentives through a 'liability rule' such as an 'escrow reserve' to align risks and rewards.
• The document suggests that the international emissions trading system can avoid the tumultuous crises seen in traditional financial markets by applying time-tested financial risk-management principles, effectively 'learning by not doing' rather than relying solely on 'learning by doing'.

APA

World Resources Institute (n.d.). Risky business. https://www.wri.org/research/risky-business

Chicago

World Resources Institute. Risky business. n.d. https://www.wri.org/research/risky-business.

Wikipedia

{{cite report |author=World Resources Institute |title=Risky business |url=https://www.wri.org/research/risky-business |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{worldresourcesinstitutendrisky, author = {{World Resources Institute}}, title = {{Risky business}}, institution = {World Resources Institute}, url = {https://www.wri.org/research/risky-business}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }