The gist of the paragraph is: Carbon emissions from deforestation are an environmental externality- its economics is not accounted for. Landowners have no incentives NOT to cut down trees. To resolve this, ‘voluntary’ carbon credits (for avoided deforestation) is suggested. There is already a market for this.
Option 5 captures this essence.
Option 1 is too generic. The paragraph is about deforestation in particular and not the entire gamut of ‘environmental economics’. Further we cannot ascertain from the paragraph whether voluntary “credits” are ‘effective’.
Option 2 is categorical in ‘compensates’ and ‘resolves’- the suggestive element is missing. (In the correct option ‘could be’ accommodates the suggestion part).
Option 3 is eliminated because of ‘must be.’
Option 4 is too categorical in stating that voluntary carbon credits compensate landowners and decreases carbon emissions. The paragraph is suggestive on this issue.
Hence, the correct answer is option 5.
Solution to Competitive Exam Special: Question of the Day: 11th Oct
