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The Bali Global Warming Conference

By pharrell

Those who advocate a free-market solution to global warming lack the courage of their convictions. A true free market system would treat greenhouse gas emissions like any other property regime: it would assign an initial distribution of property rights in greenhouse gas emissions and let the free market trade them at will. In short, it would grant every living human being an annual right to emit X pounds of greenhouse gasses, where X is the total acceptable global level of emissions divided by the earth's population (since we all own the air equally). People could then buy and sell greenhouse gas credits as needed, and clever individuals who figured out how to take gases out of the atmosphere would get new credits, which they could then sell.

Under this scheme, individual governments could determine how to dole out the carbon credits assigned to their citizens--they could grant them to individuals, or keep them for the government (while figuring out how to keep total national emissions to the granted level), or choose some hybrid scheme that combined approaches. This, except for the fact that there was an unequal initial distribution, is already how the world distributes oil and every other natural resource: some states happen to own them through luck of national history, and others now have to buy them. Some governments keep national resources in the public trust (e.g., state-owned oil companies), while others distribute them to individual citizens (e.g., they sell oil concession rights to Exxon).

Sure, there are plenty of logistical problems with this proposal. But if I were a true free marketeer, why would I think that we should treat the air differently from any other scarce natural resource?

Full post as published by Harrell Blog on December 13, 2007 (boomark / email).