Theoretical framework for carbon trading in the built environment

Purpose: This conceptual paper aims to develop a theoretical framework for carbon trading in the built environment through theories to expand current knowledge on components of carbon trading systems. Design/methodology/approach: This theoretical framework was developed and supported with existing theories and past empirical literature from built environment, economics and finance. Underlying theories used in the framework were selected due to their significance and applicability to carbon trading projects. Hypotheses set in the study summarise the propositions developed from the theories and past empirical literature. Findings: The framework reveals four major components of carbon trading for the built environment. Six hypotheses were further proposed to unravel the resultant influence of their interactions on each component in the trading system. Research limitations/implications: This paper sought to undertake a theoretical review of classical theories and past studies on carbon trading. Even though a systematic review was undertaken, the constructs in the theoretical framework may not be exhaustive. Practical implications: This study contributes and advances the body of knowledge on the components that comprise the mechanism of how carbon trading operates in the built environment. Theoretically, the framework developed serves as a multi-dimensional guide on the operations of carbon trading in the built environment. Originality/value: The theoretical framework developed endeavours to consolidate multi-faceted theories from varying disciplines on the components that comprise carbon trading in the built environment.