Making a market in environmental credits II: Watershed moments

Abstract

This pair of papers examines and describes the state action necessary to make markets function as environmental policy instruments and as strategies of governance. We do this through a detailed look at the mechanics of environmental credit compliance markets in the US states of Oregon, Ohio, and North Carolina in which stream credits are privately created and sold to developers who have impacted protected stream systems. In this paper, we observe that the governance of streams as water resources requires the state to create a scalar hierarchy that fixes certain characteristics of streams at certain scales of state action. These fixes attempt to resolve, bracket, or ignore the temporal and spatial variability of streams that can confound governance; however, these variabilities are essential to the scientific study of streams. At each of the four distinct scales, four different operations crucial to market function were observed; at each scale, elements of natural variability were fixed or confined to be expressed only within the given scale. These observations reveal principles of how scale functions within environmental governance, as well as failures where gaps and resistances appear that create unforeseen outcomes in market-led policy. In three different state settings, the establishment of a fixed scale of governance is made in different ways that depend on the local institutional and social context. However, they all act to render an unruly set of temporal and spatial flows as instead occurring within certain fixed scalar boundaries, and thus amenable to governance with markets.