Environmental Health Risks and Tradable Health Risk Permits

Health risk permits are suggested as an instrument for the systematic management of all health-relevant pollutants. These permits are denominated in statistical deaths due to pollution and have to be acquired by firms which emit pollutants inimical to health. They have two advantages: First, they guarantee that a clear decision about the acceptable number of statistical deaths due to pollution is made. Second, health risk permits are able to realize any level of health risk thus chosen in an efficient way. However, in practice some compromises have to be made: The health risk function relating emissions to health risk must employ some simplifying assumptions and complementary regulation is needed to make health risk permits feasible and acceptable. Furthermore, there are other aims of environmental policy besides the preservation of human health, such as climate control and conservation, for which health risk permits are of no use.