Currencies and the commodification of environmental law

The success of several environmental trading markets (ETMs) has led to prop osals for broader use of ETMs in environmental and resource management poli cy. The successful ETMs all share a basic feature-they exchange units of tr ade that are fungible, such as tons of sulfur dioxide or kilos of fish. Thi s feature of trading promotes resource allocation efficiency while advancin g environmental protection. But most commodities exchanged in current and p roposed ETMs, such as wetlands and endangered species habitat, exhibit nonf ungibilities across the dimensions of type, time, and space. Using ETMs to trade these commodities is no longer trading "environmental apples for appl es," and thus the rationale for using ETMs is called into question. In this article, the authors develop a comprehensive analytical framework for eval uating ETMs from the perspective of commodity nonfungibility and explore th e challenge presented by trading environmental apples for oranges. They arg ue that by focusing on nonfungible commodities and their currencies we can better explain the design of ETMs, their rules of exchange, and provisions for public participation.