Environmental Futures

1
Environmental Futures
Emile Servan-Schreiber J.
Steven Lovink NewsFutures, Inc.
TransGlobal Ventures, Inc.
2
1992Could gamblingsave science?
3
1992Could gamblingsave science?2004Could
betting marketshelp save the world?
4
Prediction markets are popular

• Play Money
• Foresight Exchange
• Hollywood Stock Exchange
• NewsFutures
• InnovationFutures
• Real Money
• Iowa Electronic Market
• Tradesports

5
Prediction markets are accurate

• In theory and in practice
• In the lab and in the field
• Compared to
• Individual experts
• Polls
• Even with just play-money
• HSX / FX
• NewsFutures vs. Tradesports

6
Prediction markets are credible

• Thought leaders are convinced
• The media are supportive
• Big business is buying in

7
Prediction markets arejust for fun?

• Current marketplaces are rather more entertaining
• than really useful Sports, Elections, Stocks,
  Movies,
• The time has come to apply prediction markets to
  the challenging policy issues of our times.

8
Environmental Futures

• Deepen public awareness of problems and
  solutions
• Cut through the fog of ambiguous scientific
  discourse
• Identify the more trustworthy experts
• Evaluate impact of interventions (or lack
  thereof)
• Provide guidance for policy-makers
• Allow businesses, communities, individuals to
  hedge risks.

9
Environment Security

• Environmental changes
• Climate changes
• Dwindling fresh water supplies
• Deforestation
• Biodiversity loss
• Ozone layer depletion
• Collapse of fisheries
• Desertification of agricultural lands
• Affect human, economic security
• Armed-conflicts induced by competition for
  dwindling natural ressources
• Population migration / environmental catastrophe
  refugees
• Economic losses (insurance, aid)
• Health and health-care spending

10
No shortage of potential market topics

• Environmental Security
• Fresh water scarcity
• Climate change
• Deforestation
• Desertification
• Biodiversity loss
• Collapsing fisheries
• Ozone depletion

11
No shortage of potential market topics

• Economic Security
• Indices growth, inflation, unemployement,
  interest rates, deficits
• Prices of natural ressources
• Economic loss due to natural events or
  environmental catastrophies (e.g., oil spills)
• Health care
• Conservation finance levels
• Socially reponsible investement levels
• Overseas development assistance
• Foreign direct investment

12
No shortage of potential market topics

• Human Security
• Population growth
• Millenium development goals
• Migration levels
• Refugees
• Number of violent conflicts
• Environmentally-induced casualties
• Pollution-induced health problems
• Epidemics

13
Why markets would be valuable

• Concern is universal, so is impact
• Most issues require global knowledge aggregation
  and cooperation, even the apparently local ones.
• The fog of science confuses the public and
  policy makers

14
Three types of Implementations

• General Public  Game 
• Trading Think-Tank
• Hedging Market

15
General Public  Game 

• Deepen global public awareness of the problems,
  solutions, and progress made (or unmade).
• People become stakeholders in a personal sense.
• Worldwide knowledge aggregation about global
  issues.
• Feel the public pulse in real-time.

16
General Public  Game 

• Multilingual implementation
• Partnership with a network of high impact local
  media outlets
• Local issues (e.g., local air pollution, water
  shortages)
• Global Issues (e.g., ozone layer, population
  growth)
• Virtual Money
• Prizes may include donnations to favorite
  environmental organizations

17
Trading Think-Tank

• Experts-only
• Cut through the fog of scientific debate with
  clear, quantified consensus signals.
• Rapidly, collectively estimate consequences of
  potential interventions.
• Help indentify those who tend to predict
  correctly, sideline those who tend to be wrong.

18
Trading Think-Tank

• Operated by an international consortium of global
  organizations (UN, World bank), leading
  universities, think tanks
• Driven by peer-recognition / competition
• Virtual-money can help prevent malicious
  manipulation
• Prizes may include research grants

19
Hedging Market

• Lets businesses, communities and individuals seek
  insurance against various environmental outcomes.
• Aggregates and reveals insider information
  about actual risks.
• Focus on the more economically-relevant outcomes.
• US-regulated derivatives marketplace such as
  Hedgestreet is an ideal venue.