Motu Economic and Public Policy Research

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Environmental Trading Game

Trading systems use price to encourage polluters to reduce their environmental impact. Regulators fix the total amount of pollution to a level that will achieve an environmental target and introduce a price on pollution. Polluters use their own information to decide how much they wish to reduce pollution. This can lead to environmental benefits at a lower cost.

ACTIVITY IDEA: A trading game and short films.

Motu has developed a game where participants take part in a simplified nutrient trading system. The game was developed to give participants ‘hands on’ experience of trading. Participants manage either a dairy farm or a sheep/beef farm. Each farmer decides how much to produce each year. When they increase production they increase their nutrient loss. During the game, regulations to control nutrient loss will be introduced. Students will have to respond by altering their production.

Motu has also created two short films to illustrate some of the issues around declining water quality in Lake Rotorua. The films feature a dairy farmer and three Maori landowners/caretakers. All have knowledge of a prototype nutrient trading system we have designed for the Lake Rotorua catchment, but were free to present their own views of the proposed system and its implications. We have produced a brief slide show to introduce these ideas.

We suggest using these materials across two sessions:

Session 1

  • Introductory slide show. 2 minutes.
  • Trading game. Approximately 45 minutes to 1 hour, including and depending upon discussion time. The extension (a demonstration of the impact of allocation) will take additional time, and could be carried over to session 2.

Session 2

  • Short films. 5 minutes and 11 minutes respectively.
  • Further discussion and/or allocation extension.

Materials

The trading game consists of three files. The handouts document includes one sheet for dairy farmers and one sheet for sheep/beef farmers. Each should keep their sheet confidential. Instructors will need one copy of the teacher’s notes. The presentation is optional, but may be useful to guide discussion.

The short films and slideshow are available on DVD from Motu (), and can be downloaded or streamed here.

Note: a trading game for emissions trading is also available. It is identical to the version described here, except that it refers to greenhouse gases in place of nutrients. Use the following files if you would like to play the emissions trading version:

Feedback

We welcome questions, and would be very happy to hear about your experiences playing the game. These can be addressed to .