Michael A. Mehling

In The Oxford Handbook of International Environmental Law, edited by Lavanya Rajamani and Jacqueline Peel. 920-936. Oxford: Oxford University Press, 2021

https://doi.org/10.1093/law/9780198849155.003.0053

This chapter traces the evolution of market mechanisms from economic theory to a core instrument of international environmental law and policy. It outlines the conceptual foundations of these mechanisms, such as emissions trading, which aim to correct market failures and achieve environmental goals cost-effectively by creating tradable rights. The analysis details the pivotal role of lawyers and economists in mainstreaming these approaches, from domestic experiments to their critical inclusion in the Kyoto Protocol. It then scrutinizes significant implementation challenges and normative critiques, including concerns over commodification, equity, and governance failures, drawing on lessons from mechanisms like the Clean Development Mechanism. The chapter concludes by assessing the contested but enduring role of market mechanisms within the contemporary climate regime, particularly under the Paris Agreement, arguing for continued, critical legal engagement to ensure their environmental integrity and justice.

Keywords: market mechanisms; emissions trading; international environmental law; climate governance; compliance