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Bhutan and carbon trading – The neo comparative advantage?

21 December 2009

That Bhutan is at the forefront of preservation and conservation is well known worldwide. Now is the time for Bhutan to use the advantage that accrues from its policies on environmental conservation for bargaining in the global carbon bazaar.

Bhutan’s story on environmental conservation and abatement of climate change has been one of consistency and sustainability. Over the years, it has followed what must have been a difficult task for many countries worldwide – that of letting development side-by-side with environmental conservation, never the former taking over completely at the cost of the latter. In so doing, it has created a total win-win situation for the end beneficiaries as well as earned plaudits for its conservation efforts.

There are a few ways to look at this neo-comparative advantage positively. First, with abatement of climate change now making a top priority worldwide in developmental efforts, it makes sense to use this comparative advantage for Bhutan’s benefit.

Bhutan can use the carbon credits that it has earned as a result of environmental conservation, especially forest protection, through Clean Development Mechanisms (CDMs). The commissioning of hydroelectric projects further can give Bhutan added advantage to earn more carbon credits.

Second, how the earned carbon credits can be used judiciously. Bhutan does not have a sufficient base of internal revenue to sustain its policies on environmental conservation. Here it could use the carbon credits wisely to fund activities related to addressing impacts of climate change – mainly research related to climate change, advocacy on environmental conservation, waste management, reforestation efforts, land reclamation efforts, biodiversity conservation, watershed management and many more.

Third, being located geopolitically between two giant emerging economies – India and China – with huge dependence on non-carbon neutral sources of energy, it makes Bhutan a good carbon sink for the emissions from these two countries. If a possible tie-up can be established between Bhutan and China and Bhutan and India on this front, it will be a win-win situation for three countries. This can further be a component of our environmental conservation-backed foreign policy.

Whichever the way, Bhutan uses the advantage to benefit the Bhutanese economy. The ball lies in our court.

By Netra Binod Sharma
Lecturer, Life Science Programme
Sherubtse College
netra80sharma@gmail.com

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