The politics of environmental market instruments: Coalition building and knowledge filtering in the regulation of forest certificates trading in Brazil

Market instruments for environmental governance have a foundation in an economic theorythat claims to be universal and atemporal, but their materialization in practice always takes place in specific socioeconomic and political contexts. The Brazilian trade in forest certificates (CRA) is a new market instrument that allows farmers that have deforested illegally prior to 2008 to become compliant by acquiring certificates from other farmers that conserve a forest area beyond legal requirements. Even though the CRA market has been praised as an innovative environmental policy, it is still unclear whether it will be implemented even after more than two decades of political debate, congressional approval of legislation and substantial investments in new supporting systems. This research paper aims to analyze the materialization of this market by reconstructing how policy participants form advocacy coalitions (i.e. environmental protection, market viability and agricultural consolidation) to advance their interests. Our results show that advocacy coalitions filter (i.e. absorb, reject or transform) new ideas, experiences and knowledge in order to influence the regulations for forest certificate trading. In doing so, they often combine positions, form new alliances and merge with other advocacy coalitions in accordance with the interests of their constituents. These fluid allegiances within and between coalitions explain why market materialization remains ambiguous and unlikely to become operational in the near future.