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immoral - Kashmanian R et al"Beyond Categorical Limits...

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Unformatted text preview: Kashmanian, R. et al., "Beyond Categorical Limits: The Case for Pollution Reduc_ tion Through Trading," paper presented at the 59th Annual Water Pollution Control Federation Conference, Los Angeles, CA, October 6—9. 1936- Kneese, A. and Schultze. C., Pollution, Prices, and Public Policy. Washington, D.C,; The Brookings Institution, 1975. Montgomery, W. D., "Markets in Licenses and Efficient Pollution Control Programs.” Journal ofEconomic Theory, 1972, 5, 395—418. Noll, R., "The Political Foundations of Regulatory Policy," Zeitschrift fur die gesaime Staatswissenschaft, 1983, I39, 377—404. Novotny, G., "Transferable Discharge Permits for Water Pollution Control In Wis. cousin," Department of Natural Resources, Madison, Wisconsin, mimeo, De. cember l, 1986. O'Neil, W., "The Regulation of Water Pollution Permit Trading under Conditions of I Varying Streamflow and Temperature." In Joeres, E. and M. David, eds., Buy- ing a Better Environment: Cost-Effective Regulation Through Permit Trading, Madison, Wisconsin: University of Wisconsin Press, 1983, 219—231. Opschoor, J., "Economic Instruments for Environmental Protection in the Nether. lands,” ENV/ECO/SlSJS, Organization for Economic Cooperation and Deva]- opment, August 1, 1986. Panella, G., "Economic Instruments for Environmental Protection in Italy," ENV/ECO/BGJI, Organization for Economic Cooperation and Development, September 2, 1986. Patterson, D., Bureau of Water Resources Management, Wisconsin Department of Natural Resources, Madison, Wisconsin, telephone interview, April 2, 1987. Pigou, A., The Economics of Welfare, fourth edition. London: Macmillan and Co., _ 1932. Plott, C., "Externalities and Corrective Policies in Experimental Markets," Economic Journal, 1983, 93, 106—127. Ralph, E., "Government Allocation of Property Rights: Who Gets What?," Journal of Policy Analysis and Management, 1983, 3, 45—61. Sprenger, R., “Economic Instruments for Environmental Protection in Germany," Organization for Economic Cooperation and Development, October 7, 1986. Thomas, L., memorandum attached to Draft Emissions Trading Policy Statement, Environmental Protection Agency, Washington, DC, May 19, 1986. Tietenberg, T., Emissions Trading: An Exercise in Reforming Pollution Policy. Wash- ington, D.C.: Resources for the Future, 1985. U.S. Congressional Budget Office, Hazardous Waste Management: Recent Changes and Policy Alternatives, Washington, D.C.: U.S. G.P.0., May 1935. U.S. Environmental Protection Agency, "Costs and Benefits of Reducing Lead in Gasoline, Final Regulatory Impact Analysis," Office of Policy Analysis, Febru- ary 1985a. . U.S. Environmental Protection Agency, "Quarterly Reports on Lead in Gasoline," Field Operations and Support Division, Office of Air and Radiation, July 16, 1985b. U.S. Environmental Protection Agency, “Quarterly Reports on Lead in Gasoline." Field Operations and Support Division, Office of Air and Radiation, March 21, May 23, July 15, I986. - Welch, W., "The Political Feasibility of Full Ownership Property Rights: The Cases of Pollution and Fisheries,” Policy Sciences, 1983, 16, 165—180. Yohe, G., “Polluters’ Profits and Political Response: Direct Control Versus Taxes: Comment,” American Economic Review. 1976, 66, 981—982. It’s Immoral to Buy the Right to Pollute (with replies)* Inn—‘Y‘u—a‘tlllniumflux—mmm.ummi'm1fil:nxiumglt>rnwmmmu—qagcw‘um Michael J. Sandel Michael J. Sande! is Professor of Government at Harvard University. At the conference on global warming in Kyoto, Japan, the United States found itself at toggerheads with developing nations on two important is— sues: The United States wanted those countries to commit themselves to restraints on emissions, and it wanted any agreement to include a trading scheme that would let countries buy and sell the right to pollute. The Administration was right on the first point, but wrong on the sec- ond. Creating an international market in emission credits would make it easier for us to meet our obligations under the treaty but undermine the ethic we should be trying to foster on the environment. Indeed, China and India threatened to torpedo the talks over the issue. They were afraid that such trading would enable rich countries to buy their way out of commitments to reduce greenhouse gases. In the end, the de- veloping nations agreed to allow some emissions trading among developed countries, with details to be negotiated next year. The Clinton Administration has made emission trading a centerpiece of its environmental policy. Creating an international market for emissions, it argues, is a more efficient way to reduce pollution than imposing fixed levels for each country. Trading in greenhouse gases could also make compliance cheaper and less painful for the United States, which could pay to reduce some other country's carbon dioxide emissions rather than reduce its own. For exam- ple, the United States might find it cheaper (and more politically palatable) to pay to update an old coal-buming factory in a developing country than to tax gas~guzzling sports utility vehicles at home. Since the aim is to limit the global level of these gases, one might ask, what difference does it make which places on the planet send less carbon to the sky? It may make no difference from the standpoint of the heavens, but it does make a political difference. Despite the efficiency of international emissions trading, such a system is objectionable for three reasons. "lt’s Immoral to Buy the Right to Pollute," editorial by Michael J. Sandal, from New York Times, Dec. 15, . A29. , - uding replies printed in New York Titties, Dec. 17, 1997. 449 450 SANDEL First, it creates loopholes that could enable wealthy countries to evade their obligations. Under the Kyoto formula, for example, the United States could take advantage of the fact that Russia has already reduced its emis- sions 30 percent since 1990, not through energy efficiencies but through economic decline. The United States could buy excess credits from Russia, and count them toward meeting our obligations under the treaty. Second, turning pollution into a commodity to be bought and sold re- moves the moral stigma that is properly associated with it, if a company or a country is fined for spewing excessive pollutants into the air, the com— munity conveys its judgment that the polluter has done something wrong. A fee, on the other hand, makes pollution just another cost of doing busi- ness, like wages, benefits and rent. The distinction between a fine and a fee for despoiling the environ- ment is not one we should give up too easily. Suppose there were a $100 fine for throwing a beer can into the Grand Canyon, and a wealthy hiker decided to pay $100 for the convenience. Would there be nothing wrong in his treating the fine as if it were simply an expensive dumping charge? Or consider the fine for parking in a place reserved for the disabled. If a busy contractor needs to park near his building site and is willing to pay the fine, is there nothing wrong with his treating that space as an expen- sive parking lot? In effacing the distinction between a fine and a fee, emission trading is like a recent proposal to open carpool lanes on Los Angeles freeways to drivers without passengers who are willing to pay a fee. Such drivers are now fined for slipping into carpool lanes; under the market proposal, they would enjoy a quicker commute without opprobrium. A third objection to emission trading among countries is that it may undermine the sense of shared responsibility that increased global coop- eration requires. Consider an illustration drawn from an autumn ritual: raking fallen leaves into great piles and lighting bonfires. Imagine a neighborhood where each family agrees to have only one small bonfire a year. But they also agree that families can buy and sell their bonfire permits as they choose. .The family in the mansion on the hill buys permits from its neighbors—— paying them, in effect, to lug their leaves to the town compost heap. The market works, and pollution is reduced, but without the spirit of shared sacrifice that might have been produced had no market intervened. Those who have sold their permits and those who have bought them, come to regard the bonfires less as an offense against clean air than as a luxury, a status symbol that can be bought and sold. And the resentment against the family in the mansion makes future, more demanding forms of iT'S IMMORAL TO BUY THE RIGHT TO POLLUTE 451 But the United States would have more suasion if these developing countries could not rightly complain that trading in emissions allows wealthy natlons to buy their way out of global obligation. Replies to Michael J. Sande! From Steven Shavell, Professor of Law and Economics at Harvard Law School M1chael J. Sande] ("It’s Immoral to Buy the Right to Pollute ” Op—Ed Dec 15) discounts the great benefits of trade in pollution rightsla ’ I flawed arguments against it. _ Suppose a rich country like the United States would have to spend $50 billion annually to reduce its carbon dioxide emissions by some amount whereas China could reduce its emissions by this same amount more cheaply at a cost of $5 billion (sa b ' ' ' _ I . y, y mstalhn sun le k in its coal-burning factories). g p smo e scmbbgrs If trade” in emissions credits were allowed both Ch' - States would be better 6&- r ma and the United The United States could ay China $30 billion for the ri ' bon dioxide. This'would maid: China $25 billion better off: ifliidfilgrlclebgfile $30 blllion and spend only $5 billion to prevent the emissions. The United States would pay $30 billion rather than spend $50 billion to abate the emlssmns. _ _ And trade would probably lead ultimately to less pollution. When coun- tries know that they can make profits or that ceilings on pollution are eas- ier toDmeet, they will be more likely to agree to reduce the total amount of perrnitted pollution over time. nd advances From Robert N. Stavins, Albert Pratt Professor of - Business and Government at the John F. Kennedy School of Government, Harvard University, and University Fellow at Resources for the Future The ink is barely dry on the Kyoto protocol, but Michael J. Sandel argues that the agreement’s emissions trading provisions, supported by the Clin- ton Administration, will foster "immoral" behavior (Op-Ed, Dec. 15). Was it immoral when the United States used a tradable permit system among refineries to phase leaded gasoline out of the market in the 1980's more rapidly than anyone had anticipated and at a savings of $250 million cooperation more difficult to achieve. a year? Of course, many countries that attended the Kyoto conference have al- ready made cooperation elusive. They have not yet agreed to restrict their ~21 : i. emissions at all. Their refusal undermines the prospect of a global envi- ronmental ethic as surely as does our pollution trading scheme. ' - York times, Dec. 17, 1997. Replies to editorial, by Steven Shave”. Robert N. Stavins, Sanford Gaines, and Eric Maskin, from New 452 W” SANDEL Is it now immoral that we are reducing acid rain by half through a tractable permit system among electrical utilities, reducing emissions (511]- for dioxide) faster than anyone had predicted and saving up to $1 billion a year for electricity consumers? Is that why the Environmental Defense Fund and others have worked so tirelessly and effectively to implement these emissions—trading programs? From Sanford E. Gaines, Professor of Law at the University of Houston Michael J. Sandel (Op-Ed, Dec. 15) invokes the moral argument against emissions trading in the context of reducing greenhouse gas emissions. Maintaining a moral stigma on pollution makes sense for hazardous sub- stances where polluters have choices, for reducing the pollution. But global warming is not such a situation. Does Mr. Sandel really believe he is be- having immorally when he cooks his dinner, switches on a light or turns on a computer to write an Op-Ed article? These activities result in emis~ sions of carbon dioxide. Or is it his utility that should be stigmatized, per— haps for not using nuclear power? To reduce greenhouse gas emissions, producers and consumers alike need to adOpt new technologies. That’s a perfect situation to use the power of the market. Mr. Sandel should reserve his moral outrage for those who don’t even want the chance to buy the right to pollute because they refuse to accept that the planet can no longer afford cheap energy. From Eric S. Maskin, Louis Berkman Professor of Economics at Harvard University Michael J. Sandel (Op-Ed. Dec. 15) neglects an important distinction in his argument against tradable emissions credits. The examples he gives of im- moral acts—throwing beer cans into the Grand Canyon or parking in spots reserved for the disabled—are discrete choices: one can do them or not do them, and society can therefore reasonably ban them outright. But virtually any manufacturing activity entails the creation of some pollution. So the question is not Will we pollute, but rather how much. Fur- ther, if there is to be pollution, shouldn’t we try to trade it off against its economic consequences? Such a trade-off is facilitated by tradable rights. we!” w_ A .«m‘sg .- .- ‘ Wivzrpfl{WifhflflfphfiWart..n} VI *UWAAume mmwum‘mI-SA Hh'5m51angxc—www': ran—‘flM-IN a: can; mnfikzungfl- 5'1 -.. .msm; . .- asiwflc‘,w..1.'_l =.,u:.v_ Lama T ransboundary $02 and Acid Rain Control ...
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