If invisible carbon waste can be traded, why not visible construction waste? Establishing the construction waste trading 'missing market'.

• Carbon trading enlightens market-based solutions to environmental governance. • Solid waste permits as tradable commodities lead to cleaner construction industry. • A four-step roadmap is given to build a construction waste cap-and-trade market. • Price volatility and fly-tipping are identified as potential risks. Of all the solid waste produced by the world's rapidly urbanising regions, a significant proportion flows from construction activities. While construction waste permit trading could incentivise both reduction and recycling, there are no known examples of such trading. Meanwhile, trading carbon permits has been successfully mainstreamed. Drawing on Coase Theorem, our research specifies a cap-and-trade construction waste trading scheme. We investigate various emissions trading schemes to propose and elaborate a preparation-implementation-evolution-review roadmap. In the first step, we decide a waste cap based on social optimum and a benchmarking method to allocate permits. Second, we establish a market that minimises transaction costs. Third, we set up a reward scheme to subsidise low-waste behaviours so that, in the fourth step, the cap can be decreased through regular reviews. Two major risks are identified, namely price volatility and fly-tipping, in response to which we propose a market stability reserve and deposit-refund system, respectively. [ABSTRACT FROM AUTHOR]