Pollution Economics

Taxes and pollution are continuously two topics of concern for many Americans. We wonder why things are so expensive nowadays. Perhaps it is because our government is trying to control things that could be taken care of in a simpler, less dramatic, way. The New York Times recently published "Pollution Economics", an article written by Dirk Forrister and Paul Bledsoe that compares the cap-and-trade (or "market") approach to solving issues such as pollution and taxes, with the Government's regulatory approach. 

China has recently adopted the cap-and-trade approach to aid towards cleaning up the dirty air they are forced to breathe, lowering the warming temperatures they are forced to walk in, and even solving food production problems that they are battling every day. The cap-and-trade approach takes these issues off of the governments hands, and allows the market to work itself out. How come the Chinese are smart enough to use this technique, and not Americans? After all, The United States is the designer of the market approach- also known as cap-and-trade approach. I can't help but believe since we succeeded with using this technique to solve acid rain problems, the Chinese observed that the cap-and-trade approach was the best solution to solving emission problems they are facing. 

While the United States has abandoned the carbon market approach to help deal with pollution problems, other nations are just beginning to adjust to the carbon market life style. Places such as Europe, New Zealand, and Shenzhen are all using the cap-and-trade approach for many different reasons. The primary reason is that their greenhouse gas emissions are improving in a cheaper way. Therefor, as Americans are forced to pay high electricity bills to aid the government in regulating pollutants, other nations are using a simpler method, the market method. 

The main difference between the government regulatory approach and the cap-and-trade approach is mentioned in this article. The regulatory approach is much more costly than the cap-and-trade approach. By using the cap-and-trade approach, environmental goals are aligned with market incentives, and therefor appeals to supply and demand creating a domino effect. With the carbon market being handled by the cap-and-trade approach comes a cheaper way of solving pollution. How could this approach not sound appealing?   

If the carbon market were to be taxed, this would force solutions to pollution in America, like it is helping in other nations. The carbon market could generate revenue that would inevitably lower other taxes thanks to a domino effect that easily occurs in economies. Taxes and pollution could both be solved with the help of the cap-and-trade approach. It's about time the government loosens their grip on the reigns and allows the market to take care of itself.