Law & Society Blog

Jonathan Wolff proposes the following:

Suppose everyone is given the right to buy only a certain number of gallons of petrol/gasoline a month; somewhat less than average current usage. You can use your allowance, or if you would prefer, sell it in whole or part on the free market either to those who want more than the allowance, or to brokers. … [This scheme] provides people with an incentive to cut personal consumption, which would be the sensible thing to do, given that the further twist in the scheme is that the allowance would decline over time, so as to make it increasingly costly to maintain the same consumption level.

In the US, a roughly similar scheme of marketable permits has had remarkable success in reducing, for example, sulfur dioxide emissions under the 1990 Clean Air Act. Marketable permits, which are scheduled to decrease over time, are among the most effective ways of providing polluters with incentives to pollute less. It also rewards net sellers of permits much more tangibly than a pollution/gasoline tax, as the cash from selling a permit goes to the seller whereas the tax goes to the government. (Of course, the pollution-reducer saves taxes, but saving taxes feels somehow less rewarding than selling one’s gas allowance on eBay after a month of taking the bus to work). If we agree that CO2 emissions are destroying the biosphere in the long run (which appears to be an unsettled question only in the US public discourse, not in the scientific literature or anywhere else in the world), and if we agree that personal consumption is a significant enough contributor to the overall problem so as to warrant regulation, then Jonathan’s proposal seems entirely reasonable to me. In practical terms, the actual permits could be issued in electronic form (e.g., with public key validation), which would make trading them virtually costless. Whoever doesn’t have access to the Internet would receive their permits in the mail. It wouldn’t take long for local gas stations to emerge as brokers for paper permits.

Technorati Tags: environment, marketable permits

License

This work is published under a Creative Commons Attribution-Noncommercial 2.5 License.