Emissions Trading Pros And Cons
Why don’t we use cap-and-trade for everything?
- Emissions
- River water allocations
- Fishing banks
- Groundwater aquifer allocations
- etc
River water allocations (for withdrawal) as well as emissions could be set at an optimum cap (in the case of emissions this would probably decline over time in order to continue emissions reduction; for river water the cap would be dynamic to account for yearly differences in precipitation, while the ultimate goal is for the river to have enough water to maintain the river ecosystem and reach the sea or its alternative destination).
For groundwater and fishing banks, the cap should be set at the recharge rate to maintain sustainability.
In all cases the ‘credits’ can be traded when not used, etc (I’m sure you get the idea from all the talk about emissions trading).
Pros and cons? Any feedback much appreciated!
There’s mainly two types of cap and trade. One is to distribute credits for free, and then let those credits be traded freely. That raises the question of how you distribute the credits. I mean, you can’t have people getting credits for free every period, and then selling them all to make a profit. The best way is probably to distribute them based on usage in the previous period.
The other way is to sell credits, with the revenue raised being used as tax revenue. This eliminates the distribution problem. But this could be a market distortion just like subsidies or excise taxes. So this method is probably best for activities that have negative externalities like emissions. But for water use, I don’t think there is any negative as long as there is no water shortage. So the first cap and trade method is better for that.
Pros:
The pros of cap and trade are that it automatically prices limited resources for optimal usage, using free market forces. That’s a powerful pro, and the main reason for using cap and trade over other rationing methods.
Cons:
One con for some of these could be enforcement and/or compliance costs. For example, if groundwater is used by many individuals through their own wells, you would need to track each well separately, which probably would require equipment on each well. There could be an issue if people could bypass the equipment, or if they have an unreported well that they use to get their water.
Also, it could be difficult for individuals to predict the amount of credits they need for the future, not to mention that it would be a hassle (though if there were just a slightly higher price for going over the limit, it may not be too bad).
And what if there is unexpected precipitation levels for a period? Perhaps many of these problems could be minimized if there could be no credits, but rather a floating price that automatically adjusts based on the usage and water supply.
For fishing, cap and trade auctioning could work for commercial fishing. I know they already ration some commercial fishing based on fish populations, but not with the pricing mechanism of cap and trade. But for individuals going to catch a few fish, cap and trade would require that many people participate in an auction in advance. The compliance effort would be more than it is worth. There’s no need to be that accurate with the pricing anyway. Other rationing methods would be good enough.
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Pros & Cons – Widescreen Dolby $8.99 In this comedy, a mild-mannered accountant (Larry Miller) finds himself behind bars after he becomes unwittingly implicated in an embezzlement scandal engineered by his boss. Left to fend for himself in prison, the accountant makes friends with another inmate who was railroaded (Tommy Davidson), and with the help of the kingpin of the jailhouse gang (Delroy Lindo), they hatch a scheme to break out of the big house and get revenge on the people who sent them there. Pros & Cons also stars Julie Warner, Darren McGavin, and David Rasche. ~ Mark Deming, Rovi |
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Pros & Cons Of Hitchhiking $6.99 Track Listing: 1. 4:30 Am (Apparently They Were Travelling Abroad), 2. 4:33 Am (Running Shoes), 3. 4:37 Am (Arabs With Knive and West German Skies), 4. 4:39 Am (For the First Time Today, Part 2), 5. 4:41 Am (Sexual Revolution), 6. 4:47 Am (The Remains of Our Love), 7. 4:50 Am (Go Fishing), 8. 4:56 Am (For the First Time Today, Part 1), 9. 4:58 Am (Dunroamin, Duncarin, Dunlivin), 10. 5:01 Am (The Pros and Cons of Hitch Hiking Part 10), 11. 5:06 Am (Every Strangers Eyes), 12. 5:11 Am (The Moment of Clarity) |
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