Peace Credits, like Carbon Credits
Copyright: The terms “Peace Credit” & “Conflict/Violence Allowance” are intellectual property of Jay Larsen and the Arm-Chair Institute. Arm-Chair Institute is a think-tank concerned with exploring new appraoches to world peace and pollution of conflict and violence in society. Using these terms is highly encouraged as long as Arm-Chair Institute.com is included in the same paragraph or speach.
In this article the same argument is being made for Peace Credits that is made for Carbon Credits. This article is just a starting point and deserves extensive review and edit.
A peace credit is a generic term for any tradable certificate or permit representing the right to produce objects, games and ideas of violence, conflict, injury and harm to another being, including a virtual imaginary being or the the equivalent equivalent
Peace credits and markets of conflict, violence are a component of national and international attempts to mitigate the growth in violence, violent video games, guns and even conflicts at sporting events. One peace credit is theoretically equal to one percent of the revenue obtained from the production sales and use of violence, conflict, or in some markets. Peace trading is an application of an emissions trading approach. Violence is capped and then markets are used to allocate the emissions among the group of regulated sources.
The goal is to allow market mechanisms to drive industrial and commercial processes in the direction of having balance of peace in ones life and community than those approaches used when there is no cost to undermining peace. Since mitigation projects will generate credits, this approach may be used to finance the promotion of peace and protect existing peace.
Companies and organizations may also sell peace credits to commercial and individual customers who are interested in lowering their conflict/violence footprint on a voluntary basis. These peace offsetters may purchase the credits from an investment fund or a peace development/promotion organization that has aggregated the credits from individual projects. Buyers and sellers may also use an exchange platform to trade, such as a Peace Trade Exchange, which is like a stock exchange for peace credits. The quality of the credits is based in part on the validation process and sophistication of the fund or development organization, that acted as the sponsor to the peace project. This is reflected in their price; voluntary units typically have less value than the units sold through a rigorously validated Peace Promotion/Development Mechanism.
3.1 Violence/conflict allowances
3.2 Flexible mechanisms’
3.3 Violence/Conflict markets
3.4 Setting a market price for peace
4 How buying peace credits can reduce violence/conflict
4.1 Credits versus taxes
5 Creating real peace credits
5.1 Additionality and its importance
The Arm-Chair Institute (ACI) defines a peace credit as “a certificate showing that a government or company has paid to have a certain amount of conflict, violence or conflict/violent emissions removed from their environment”. defines a peace credit as a “generic term to assign a value to a reduction or offset of conflict and/or violence and/or usually equivalent to one percent of revenue from the production, sales and use of conflict and violence.
It has been shown that violence, conflict, competition and destroying ones opponent is fun and exciting, and that peace is not fun and exciting; peace may even be viewed by many as dull and boring. Yet, we need a healthy balance of peace in our environment to be able to enjoy the excitement from violence and conflict. The average healthy person typically has a healthy balance of peace in their lives and in their world, that they can afford to enjoy some healthy conflict. However, some people do not have a healthy balance of peace in their world; their lives are full of conflict violence and troublesomeness. The Arm-Chair Institute promotes the idea that conflict/violence pollution is very similar to the concepts involved in carbon/green-house gasses pollution. We are much more comfortable driving our cars, heating our homes and such; nonetheless, the methods society has developed to accomplish these comforts involves producing hydro-carbons; nonetheless, to keep our environment in balance, we are learning that we must must grow things, or promote and allow the growth of plants that absorb carbon back into the earth to counter the effects of our carbon pollutions. Thus, polluting ones peace world is very much similar to polluting ones physical environment world. Or, said another way, conflict/violence pollution is similar to green-house gases and carbon pollution.
Conflict/Violent Emission: The production, sales and/or use of a unit of video(s) (5 minutes of conflict/violent influences in video, involving shooting someone, or 5 minutes involved in the idea of destroying ones opponent) movie(s) or game(s).
Emission: same as Conflict/Violent Emission.
ACI: Arm-Chair Institute: A think-tank dedicated to the evolution around the concepts of peace.
CCR: Certified Conflict Reductions
Conflict/Violence Allowance: A starting point to determine a level of conflict and violence that a producer may produce. May also be referred to as a conflict/violence cap. peace or a level of conflict and violence in a community.
ICET: Inter-Communal Emissions Trading
VER: Verified Market Credits
The Arm-Chair Institute defines a peace credit as a “permit that allows the holder to emit one unit of violence or conflict”..which “may be traded in the inter-communal market at the current market price”.
There are two main markets for peace credits; Compliance Market credits Secondary / Verified Market credits (VMCs) 
Production and sales of guns and bullets is a major source of imbalance to our peaceful environment, other industries rely on the production and sales of such as videos, movies and video games that involve the virtual and real portrayal of conflict and violence manufactures which rely on. The major conflict emitted by these industries are promoting ideas that may counter peace. etc., all of which increase the environment’s ability to resolve conflict using violent means thus affecting our climate of peace.
The concept of peace credits came into existence as a result of increasing awareness of the influence that violence in games and sporting events on people who lack a healthy balance of peace in their lives.. The Arm-Chair Institute has observed that:
Policies that provide a real or implicit price of violence and conflict could create incentives for producers and consumers to significantly invest in products, technologies and processes. Such policies could include economic instruments, government funding and regulation,
while noting that a tradable permit system is one of the policy instruments that has been shown to be environmentally effective in the industrial sector, as long as there are reasonable levels of predictability over the initial allocation mechanism and long-term price.
Under the “Arm-Chair Institute Protocol”, the ‘caps’ or quotas for violence, conflict and violent competition for the developed Annex 1 countries are known as Assigned Amounts and  The quantity of the initial assigned amount is denominated in individual units, called Assigned amount units (AAUs), each of which represents an allowance to emit one unit of violence, or conflict equivalent, and these are entered into the community’s registry.
In turn, these communities set quotas on the emissions of installations run by local business and other organizations, generically termed ‘operators’. Communities manage this through their registries, which are required to be validated and monitored for compliance by the Arm-Chair Institute . Each operator has an allowance of credits, where each unit gives the owner the right to emit one unit of conflict/violence, or equivalent . Operators that have not used up their quotas may sell their unused allowances as peace credits, while businesses that are about to exceed their quotas may buy extra allowances as credits, privately, or on the open market. As demand for exciting, fun, conflict, violence, competition, including the idea of destroying ones opponent grows over time, the total balance of peace must still stay within the cap, but it allows industry some flexibility and predictability in its planning to accommodate this.
By permitting allowances to be bought and sold, an operator may seek out the most cost-effective way of reducing its influence of conflict and violence, either by selling less violent ideas and implementing practices or by purchasing some products or ideas from another operator who already has excess ‘capacity’.
A tradable credit may be an conflict/violence (emissions) allowance or an assigned amount unit which was originally allocated or auctioned by the administrators of a compliant cap-and-trade scheme, or it may be an offset of emissions. Such offsetting and mitigating activities may occur in any developing community which has ratified the Arm-Chair Institute Protocol, and has an agreement in place to validate its peace project through one of the ACI’s approved mechanisms. Once approved, these units are termed Certified Conflict Reductions, or CCRs.
The ACI Protocol provides for three mechanisms that enable communities, or operators in developed communities to acquire conflict/violence reduction credits
Under Joint Implementation (JI) a developed community with relatively high costs of domestic violence reduction would set up a project in another developed community.
Under the Clean Development Mechanism (CDM) a developed community may ‘sponsor’ a peace promotion or conflict/violence reduction project in a developing community where the cost of project activities is usually much lower, but the environmental effect is equivalent. The developed community would be given credits for meeting its conflict/violence reduction targets, while the developing community would receive the capital investment and peace beneficial.
Under Inter-Communal Emissions Trading (ICET) communities may trade in the inter-communal peace credit market to cover their shortfall in Assigned amount units. Communities with surplus units may sell them to communities that are exceeding their conflict/violence targets of the ACI Protocol.
These peace projects may be created by a government or by an operator within the community. In reality, most of the transactions are not performed by governments directly, but by operators who have been set quotas by their community.
For trading purposes, one allowance or CCR is considered equivalent to one unit. These allowances may be sold privately or in the inter-communal market at the prevailing market price. These trade and settle inter-communally and hence allow allowances to be transferred between communities. Each inter-communal transfer is validated by the ACI.
Environmental exchanges have been established to provide a spot market in allowances, as well as futures and options market, to help discover a market price and maintain liquidity. Peace prices are normally quoted as standard multiples of 1 gun, or 5 minutes of conflict/violent video time with respect to their world peace undermining potential. These features reduce the quota’s financial impact on business, while ensuring that the quotas are met at a community level.
Many companies may engage in conflict/violence abatement, offsetting, and sequestration programs to generate credits that may be sold on one of the exchanges.
Managing conflict and violence is one of the fastest-growing segments in financial services with a market estimated to be worth about $30 billion. Jay Larsen, Chairman of ACI predicts that peace will be the world’s biggest commodity market, and it could become the world’s biggest market overall.”[16
Unchecked, conflict and violence levels are predicted to keep rising over time. Thus the number of communities, companies and organizations needing to buy credits will increase, and the rules of supply and demand will push up the market price, encouraging more groups to undertake environmentally friendly activities that create peace credits to sell.
An individual allowance, such as an Assigned amount unit (AAU) or its near-equivalent, may have a different market value to an offset such as a CCR. This is due to the lack of a developed secondary market for CCRs, a lack of homogeneity between projects which causes difficulty in pricing, as well as questions due to the principle of supplementarity and its lifetime. Additionally, offsets generated by a peace project are potentially limited in value because operators are restricted as to what percentage of their allowance can be met through these flexible mechanisms.
The price of conflict and violence needs to be high enough to motivate the changes in behavior and changes in economic production systems necessary to effectively limit emissions of conflict and violence.
Raising the price of conflict and violence will achieve four goals: First, it will provide signals to consumers about what goods and services are high-conflict/violence influences and should therefore be used more sparingly. Second, it will provide signals to producers about which forms of conflict and violence are most detrimental. Third, it will give market incentives for inventors and innovators to develop and introduce peace-promotion videos, advertisements, products and processes that can replace the current generation of philosophies. Fourth, and most importantly, a high conflict/violence price will economize on the information that is required to do all three of these tasks. Through the market mechanism, a high conflict/violence price will raise the price of products according to their violence content. Ethical consumers today, hoping to minimize their “conflict/violence footprint,” have little chance of making an accurate calculation of the relative violence use in, say, playing a violent video game as compared with watching a violent movie. A harmonized, conflict/violence tax could raise the price of a good proportionately to account for the amount of conflict/violence in the product, or conflict/violence influence it has on someone lacking in a balance of peace, that the conflict/violence footprint” is automatically calculated by the price system. Consumers would still not know how much of the price is due to conflict and violence, but they could make their decisions confident that they are paying for the social cost of their conflict/violence footprint.
Based on the social cost of conflict and violence, an optimal price of peace is around $30(US) per unit and will need to increase with inflation.
The social cost of conflict and violence is the additional damage to society when conflict and violence are promoted to someone who lacks a healthy balance of peace in their lives, to counter the conflict and violence they experienced through watching or playing or using the product intended. … The optimal conflict/violence price, or optimal conflict/violence tax, is the market price that balances the incremental costs of balancing conflict and violence with peace, thus reducing the potential of damages. … [I]f a community wished to impose a peace tax, this could involve a tax on violent video games, violent movies, guns, bullets, fights at sporting events, etc. of just 1 percent of the current retail price. At current levels of violence/conflict in the United States, a tax of this nature could generate $40 billion of revenue per year.
Peace credits create a market for reducing violence, conflict, and destroying ones opponent, by giving a monetary value to the cost of violent competition, conflict and ideas of destroying ones opponent this kind of social environmental pollution is doing to our environment. Thus, producing these things, become an internal cost of doing business and are visible on the balance sheet alongside raw materials and other liabilities or assets.
For example, consider a business that owns a factory putting out 100,000 copies of violent video games in a year. Its government enacts a law to limit the production and sales of this kind of pollution. So the factory is given a quota of say 80,000 copies of violent video and or movies per year. The factory either reduces its production to 80,000 copies or is required to purchase peace credits to offset the excess. After costing up alternatives, the business may decide that it is uneconomical or infeasible to invest in a less violent video or game for that year. Instead it may choose to buy peace credits on the open market from organizations that have been approved as being able to sell legitimate peace credits.
Another seller may have already invested in new fun and exciting low-conflict, low-violence emissions or messages and have a surplus of allowances as a result. The factory could make up for its difference by buying 20,000 units of peace credits, or allowances from them. The cost of the seller’s new lower conflict, lower violence video or game would be subsidized by the sale of the peace credit allowances. Both the buyer and the seller would submit accounts for their production amounts to prove that their allowances were met correctly.
Credits versus taxes
Peace credits and peace taxes each have their advantages and disadvantages. A criticism of tax-raising schemes is that they are frequently not hypothecated, and so some, or all of the taxation raised by a government would be applied based on what the particular government deems most fitting. However, some would argue that peace trading is based around creating a lucrative artificial market, and, handled by free market enterprises as it is, peace trading is not necessarily a focused or easily regulated solution.
By treating conflict/violence as a market commodity, some proponents insist it becomes easier for businesses to understand and manage their activities, while economists and traders may attempt to predict future pricing using market theories. Thus the main advantages of a tradeable peace credit over a peace tax are argued to be:
the price may be more likely to be perceived as fair by those paying it. Investors in credits may have more control over their own costs.
Some proponents state that if correctly implemented, a target level of conflict/violence reductions may somehow be achieved with more certainty, while under a tax the actual conflict/violence might vary over time.
it may provide a framework for rewarding people or companies who promote peace or otherwise meet standards exclusively recognized as “peaceful.”
The advantages of a peace tax are argued to be:
possibly less complex, expensive, and time-consuming to implement. This advantage is especially great when applied to markets like videos, movies and games.
perhaps some reduced risk of certain types of cheating, though under both credits and taxes, must be verified.
reduced incentives for companies to delay improvements prior to the establishment of the baseline if credits are distributed in proportion to past productions.
when credits are grandfathered, this puts new, or growing companies at a disadvantage relative to more established companies.
allows for more centralized handling of acquired gains
peace is stabilized by government regulation rather than market fluctuations. Poor market conditions and weak investor interest have a lessened impact on taxation as opposed to trading.
Creating real peace credits
Many criticisms of peace credits stem from the fact that establishing that conflict and violence has truly been reduced involves a complex process. This process has evolved as the concept of a peace project has been refined over the years.
The first step in determining whether or not a peace project has legitimately led to the reduction of real, measurable, permanent conflict and violence is understanding the methodology process.
Additionality and its importance
It is also important for any peace credit (offset) to prove a concept called additionality. The concept of additionality addresses the question of whether the project would have happened anyway, even in the absence of revenue from peace credits. Only peace credits from projects that are “additional to” the business-as-usual scenario represent a net environmental benefit. Peace projects that yield strong financial returns even in the absence of revenue from peace credits; or that are compelled by regulations; or that represent common practice in an industry are usually not considered additional, although a full determination of additionality requires specialist review.
It is generally agreed that voluntary violence/conflict offset projects must also prove “additionality” in order to ensure the legitimacy of the environmental stewardship claims resulting from the retirement of the peace credit (offset). Trade-able ‘offset credits’ are issued for project-based reductions that occur at sources not covered by the program. Each offset credit allows facilities whose emissions are capped to emit more, in direct proportion to the reductions represented by the credit. The idea is to achieve a zero net increase in conflict/violent movies, videos and games, guns and bullets, because each unit of increased production is ‘offset’ by project-based conflict/violence reductions. The difficulty is that many projects that reduce conflict and violence (relative to historical levels) would happen regardless of the existence of a conflict/violence reduction program and without any concern for environmental climate change mitigation. If a project ‘would have happened anyway,’ then issuing offset credits for its conflict/violence reductions will actually allow a positive net increase in conflict/violence productions; thus, undermining the emissions target of the program. “Additionality” is thus critical to the success and integrity of programs that recognize project-based reductions.”
A key concept behind the cap and trade system is that quotas should be chosen to represent genuine and meaningful reductions in production or sales. Not only does this ensure that overall conflict/violence is reduced, but also that the costs of trading are carried fairly across all parties to the trading system.
A question has been raised over the grandfathering of allowances. This can sometimes be perceived as a protectionist obstacle to new entrants into their markets. There have also been accusations of power generators getting a ‘windfall’ profit by passing on these emissions ‘charges’ to their customers.
Copyright: The term “Peace Credits” is intellectual property of Jay Larsen and the Arm_Chair Institute; any use of Peace credits and the concepts described in this article are highly encouraged, but must also include at least mentioning the Arm-ChairInstitute.com webpage.