The Tradable-Permits Approach to Protecting the Commons: Lessons for Climate Change

Tradable-permit approaches for rationing access to the commonshave been applied to many different types of resources in manydifferent countries. This essay reviews the experience withthree main applications of tradable-permit systems—air-pollutioncontrol, water supply, and fisheries management—as wellas some unique related programmes. The purpose of the reviewis to draw together what we have learned about tradable permitsin practice that might offer some useful insights for the implementationof the three tradable-permit mechanisms that are part of theKyoto Protocol.     

Tradeable permits for pollution control when emission location matters: What have we learned?

Our knowledge about tradeable permit approaches to pollution control has grown rapidly in the two decades in which they have received serious analytical attention. Not only have the theoretical models become more focused and the empirical work more detailed, but we have now had over a decade of experience with them in the U.S. This article draws upon economic theory, empirical studies, and actual experience with implementation to summarize what we have learned about applying tradeable permits to air pollution control in the special circumstance where the spatial aspects of the problem are a prime consideration.     

Disclosure Strategies for Pollution Control

Disclosure strategies, which involve public and/or private attempts to increase the availability of information on pollution, form the basis for what some have called the third wave in pollution control policy (after legal regulation – the first wave – and market-based instruments – the second wave). While these strategies have become common in natural resource settings (forest certification and organic farming, for example), they are less familiar in a pollution control context. Yet the number of applications in that context is now growing in both OECD and developing countries. This survey will review what we know and don’t know about the use of disclosure strategies to control pollution and conclude with the author's sense of where further research would be particularly helpful.