Friday, May 25, 2007

Testing Market Efficiency and Price Discovery in European Carbon Markets

While Speaker Pelosi and Senator McCain are jetsetting around (see post below [haven't these people ever heard of video or teleconferencing? Do they have to fly in to see a glacier melting in Greenland? At least get into the '90s, people]) The pro's are wading through stuff like this.

From the abstract:

"We examine the issues of market efficiency and price discovery in the European Union carbon futures market. Our findings suggest that none of the carbon futures contracts examined here are priced according to the cost-of-carry model, although two of the three futures contracts studied here form a stable long-run relationship with the spot price, and hence act as adequate risk mitigation instruments."

44 page PDF
Hat Tip: Environmental Valuation & Cost-Benefit News