The property rights approach to pollution has led to prominent successes in many areas, and economists and policymakers continue to explore ways to implement these ideas to address a variety of environmental challenges. Throughout the 20th century, economists continued to refine how they thought about environmental protection.
This same sentiment, McCarthy wrote, “perfectly echoed” the Clean Air Act’s stipulations that allowed a company to pollute in excess of its allotment, so long as it purchased credits from another that had reduced pollution elsewhere.
McCarthy drew a direct connection from indulgences to pollution permits. He noted that “the anticipation of credits for forgiveness of sin” had motivated William of Aquitaine to establish the monastery at Cluny in 910 so that monks could pray for the salvation of his army as it went about its work of “war, pillage, rapine, and other activities.”
The property rights embodied in pollution permits provide an incentive for firms closest to the source of the pollution to think carefully and innovatively about how to reduce it. Marketable pollution permits have attracted broad support for good reason: In many contexts, the policy has demonstrably worked.
The non-economists and politicians who wrote the first major federal anti-pollution laws, such as the Clean Air Act of 1970 and the Federal Water Pollution Control Act of 1972, had a straightforward notion of how to proceed: They sought to give the newly created Environmental Protection Agency (EPA) the power to limit emissions of designated air and water pollutants . Economists refer to this as the “command-and-control” approach; for those who viewed pollution as a sin, such rules might be called “thou shalt nots.”
Marketable pollution permits have attracted broad support for good reason: In many contexts, the policy has demonstrably worked. The property rights embodied in pollution permits provide an incentive for firms closest to the source of the pollution to think carefully and innovatively about how to reduce it.
If a firm reduced emissions from some smokestacks by more than legally required, it could then reduce pollution from other smokestacks by less than would otherwise have been required—as long as total emissions from the firm met the legal limit.
Environmental markets have revolutionized the way economists and environmentalists address pollution problems. Three decades ago, Eugene McCarthy, once a prominent Democratic presidential candidate, argued in The New Republic that a provision in the Clean Air Act of 1990 that would grant tradable permits to companies to emit a certain amount ...
This original wave of environmental laws was clearly effective at reducing air and water pollution in the 1970s and 1980s.
This same sentiment, McCarthy wrote, “perfectly echoed” the Clean Air Act’s stipulations that allowed a company to pollute in excess of its allotment , so long as it purchased credits from another that had reduced pollution elsewhere.
In keeping with this pragmatism, the amendments to the Clean Air Act critiqued by McCarthy became law in 1990 with the support of roughly 90 percent of Democrats and Republicans in Congress before being signed into law by President George H.W. Bush. Today, not only do economists routinely consider pollution as an issue of tradable rights, ...