Hostname: page-component-78c5997874-v9fdk Total loading time: 0 Render date: 2024-11-02T18:46:41.632Z Has data issue: false hasContentIssue false
  • English
  • Français

Cap-and-Trade: The Evolution of an Economic Idea

Published online by Cambridge University Press:  15 September 2016

Tom Tietenberg
Tom Tietenberg*
Affiliation:
Emeritus, at Colby College in Waterville, Maine
Get access

Abstract

Over the past three decades or so, emissions trading has evolved from an idea that was little more than an academic curiosity to its current role as the centerpiece of the U.S. program to control acid rain and international programs to control greenhouse gases. This essay identifies some of the key milestones of this evolution, describes how that evolution was shaped by economic analysis, elicits some of the lessons about the design and effectiveness of emissions trading that have emerged from analysis of that evolution, and points out a few of the barriers that lie in the path of achieving a truly global carbon market.

Keywords

emissions tradingcap-and-tradeclimate policy
Type
Invited Papers
Information
Agricultural and Resource Economics Review , Volume 39 , Issue 3 , October 2010 , pp. 359 - 367
Copyright
Copyright © 2010 Northeastern Agricultural and Resource Economics Association 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Anderson, R.C. 2001. “The United States Experience with Economic Incentives for Pollution Control.” National Center for Environmental Economics, Washington, D.C. Available at http://yosemite.epa.gov/ee/epa/eerm.nsf/a7a2ee[-]5c6158cedd852563970080ee30/4336170c9605caf8852569d20076110f?OpenDocument (accessed July 21, 2010).Google Scholar
Baumol, W.J., and Oates, W.E. 1971. “The Use of Standards and Prices for Protection of the Environment.” Swedish Journal of Economics 73(1): 42–54.CrossRefGoogle Scholar
Carlson, C., Burtraw, D., Cropper, M., and Palmer, K. 2000. “Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?” Journal of Political Economy 108(6): 1292–1326.CrossRefGoogle Scholar
Cason, T.N. 1993. “Seller Incentive Properties of EPA's Emission Trading Auction.” Journal of Environmental Economics and Management 25(2): 177–195.CrossRefGoogle Scholar
Coase, R. 1960. “The Problem of Social Cost.” Journal of Law and Economics 3(October): 1–44.CrossRefGoogle Scholar
Crocker, T.D. 1966. “The Structuring of Atmospheric Pollution Control Systems.” In Wolozin, H., ed., The Economics of Air Pollution. New York: W.W. Norton & Co.Google Scholar
Dales, J.H. 1968. Pollution, Property and Prices. Toronto: University of Toronto Press.Google Scholar
Dudek, D.J., and Palmisano, J. 1988. “Emissions Trading: Why Is This Thoroughbred Hobbled?” Columbia Journal of Environmental Law 13(2): 217–256.Google Scholar
Ellerman, A.D., Joskow, P.L., Montero, J.-P., Schmalensee, R., and Bailey, E.M. 2000. Markets for Clean Air: The U.S. Acid Rain Program. Cambridge, UK: Cambridge University Press.CrossRefGoogle Scholar
Farrell, A. 2001. “Multi-Lateral Emission Trading: Lessons from Inter-State NOx Control in the United States.” Energy Policy 29(13): 1061–1072.CrossRefGoogle Scholar
Hahn, R.W., and Noll, R.G. 1982. “Designing a Market for Tradeable Emission Permits.” In Magat, W.A., ed., Reform of Environmental Regulation. Cambridge, MA: Ballinger.Google Scholar
Hall, D.S., Levi, M., Pizer, W.A., and Ueno, T. 2008. “Policies for Developing Country Engagement.” Discussion Paper No. 2008-15, Harvard Project on International Climate Agreements, Harvard University, Cambridge, MA. Available at http://belfercenter.ksg.harvard.edu/publication/18649/policies_for_developing_country_engagement.html (accessed July 21, 2010).Google Scholar
Hall, J.V., and Walton, A.L. 1996. “A Case Study in Pollution Markets: Dismal Science vs. Dismal Reality.” Contemporary Economic Policy XIV(2): 67–78.CrossRefGoogle Scholar
Hamdi-Cherif, M., Guivarch, C., and Quirion, P. 2009. “Sectoral Targets for Developing Countries: Combining ‘Common but Differentiated Responsibilities’ with ‘Meaningful Participation’.” Working paper, Fondazione Eni Enrico Mattei, Milan, Italy. Available at www.feem.it/userfiles/attach/2010461754324NDL2010-037.pdf (accessed July 21, 2010).Google Scholar
Hausker, K. 1992. “The Politics and Economics of Auction Design in the Market for Sulfur Dioxide Pollution.” Journal of Policy Analysis and Management 11(4): 553–572.CrossRefGoogle Scholar
Jaffe, J.L., and Stavins, R.N. 2008. “Linkage of Tradable Permit Systems in International Climate Policy Architecture.” FEEM Working Paper No. 90.2008 and HKS Working Paper No. RWP08-053, Fondazione Eni Enrico Mattei, Milan, Italy. Available at http://belfercenter.ksg.harvard.edu/publication/18580/linkage_of_tradable_permit_sys[-]tems_in_international_climate_policy_architecture.html (accessed July 21, 2010).CrossRefGoogle Scholar
Kelman, S. 1981. What Price Incentives? Economists and the Environment. Westport, CT: Greenwood Publishing Group.Google Scholar
Kneese, A.V., and Schultze, C.L. 1975. Pollution, Prices, and Public Policy. Washington, D.C.: The Brookings Institution.Google Scholar
Kruger, J.A., and Pizer, W.A. 2004. “Greenhouse Gas Trading in Europe—The New Grand Policy Experiment.” Environment 46(8): 8–23.Google Scholar
Maine Department of Environmental Protection. 2010. “Third Biennial Report on Progress toward Greenhouse Gas Reduction Goals.” Maine Department of Environmental Protection, Augusta, ME. Available at http://www.maine.gov/dep/air/globalwarming/index.htm (accessed July 21, 2010).Google Scholar
Montero, J.-P., Sanchez, J.M., and Katz, R. 2002. “A MarketBased Environmental Policy Experiment in Chile.” Journal of Law and Economics 45(1): 267–287.CrossRefGoogle Scholar
Montgomery, W.D. 1972. “Markets in Licenses and Efficient Pollution Control Programs.” Journal of Economic Theory 5(3): 395–418.CrossRefGoogle Scholar
Nussbaum, B.D. 1992. “Phasing Down Lead in Gasoline in the U.S.: Mandates, Incentives, Trading and Banking.” In Jones, T. and Corfee-Morlot, J., eds., Climate Change: Designing a Tradeable Permit System. Publication No. 21-34, Organization for Economic Cooperation and Development (OECD), Paris.Google Scholar
O’Ryan, R. 1996. “Cost-Effective Policies to Improve Urban Air Quality in Santiago, Chile.” Journal of Environmental Economics and Management 31(3): 302–313.CrossRefGoogle Scholar
Pigou, A.C. 1920. The Economics of Welfare. London: Macmillan.Google Scholar
Tietenberg, T.H. 1973. “Controlling Pollution by Price and Standard Systems: A General Equilibrium Analysis.” Swedish Journal of Economics 75(2): 193–203.CrossRefGoogle Scholar
Tietenberg, T.H. 2006. Emissions Trading: Principles and Practice (2nd ed.). Washington, D.C.: Resources for the Future. Google Scholar
Tietenberg, T.H. 2010. “Identifying the Sources of Maine's Dramatic Decline in Carbon Emissions Since 2005.” Available at http://www.colby.edu/personal/t/thtieten/papers.html (accessed July 21, 2010).Google Scholar
Wara, M. 2007. “Is the Global Carbon Market Working?” Nature 445(7128): 595–596.CrossRefGoogle ScholarPubMed