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What Is Green Money?

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  • Written By: Mary McMahon
  • Edited By: Kristen Osborne
  • Last Modified Date: 16 October 2014
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Green money is money used in association with ecological activities. Ecocurrency, as it is also known, is spent in endeavors with an environmentally friendly component, and can include government funds, private investments, and spending by companies interested in environmental issues. Environmentalists, as well as economists, have recognized the important role spending and economic decisions can play in conserving the environment and addressing environmental problems.

One example of green money is funds dedicated to development projects intended to address environmental problems. This can include things like building power plants designed to harness alternative energy like wind and solar, as well as funding green job initiatives — providing money to pay for people working in the environmental sector. Green money can also be used to finance activities like redesigning equipment to reduce pollution or developing energy efficient homes and cars.

People can also use green money in programs like carbon trading. In nations where a cap and trade system to control pollution has been created, companies generating less than their allotted pollution targets receive carbon credits. They can sell these to other companies on a carbon exchange. The currency used on such exchanges may be referred to as green money because it is being used for environmental purposes. Funds spent for environmental remediation and protection can also be considered a form of green money, as the money represents an investment in the future of the environment.

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Increasing awareness of environmental issues in the 20th century led to the promotion of a wide range of programs to get companies of all sizes interested in environmental protection. Along with increased corporate responsibility for environmental issues came the rise of things like green mutual funds, funds comprised solely of companies with an environmental mission. Money generated by these funds could be considered a form of green money, as investors are making money on companies concerned with developing environmental solutions.

Separate currency is usually not used for environmental activities, but it is possible to track regular currency as it moves through environmental investments. Financial organizations may monitor activity in the environmental sector of the economy and governments also follow green spending. This allows analysts to see how much the green sector is growing and to identify areas of the sector that could be profitable for future investment and development. This information may be used by governments to promote job creation in expanding areas of the green economy.

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