Saturday, January 05, 2008

Carbon Tax vs Carbon Markets vs Commons Trust

There is a debate as to whether carbon taxes or carbon markets are better to reduce our greenhouse gas problem.

Carbon tax means adding a tax amount at the retail level that will be directed to fixing the environment. The arguments for it are that it is pretty simple and it is harder for the oil companies to play games to avoid it. The arguments against it are that it is an uphill battle politically (more taxes! is this communism??) and that it would impact the poor more than the rich. For an argument in favor of carbon taxes see this article and this advocacy Website.

Carbon markets are where the goverment sets up a bunch of permits to pollute and gives them to corporations based on their current pollution amounts, then the corporations are allowed to trade them amongst themselves. When this occurs, say the advocates, the corporations start to compete among themselves to use fewer permits so they can sell more of them to the greater polluters.

People who like the idea of carbon markets say that it is a true market-based solution to the problem. People who are against it say that it will take a long time to reduce pollution because the permits represent the current level of pollution and it will take years before this system will get us down to the levels we need to be. For an article showing carbon markets in a positive light, see this.

But there is a third view on how to reduce greenhouse gases. Peter Barnes, co-founder of Working Assets, wrote a book recently called Capitalism 3.0: A Guide to Reclaiming the Commons (Bk Currents) where he states that both carbon markets and carbon taxes are too problematic to be helpful in the long term battle against pollution. He sees a better alternative with establishing a commons trust. This would be where a third type of institution (not government, not private) is built in the United States (or any country) that is solely responsible for preserving the commons. In global warming terms, the commons refers to the atmosphere, clean water and healthy forests - the general ecosystem. The trustees represent all of us, including the future unborn generations, as well as the non-human species and the ecosystem itself. Their responsibility it to those stakeholders.

Each year, the trust would collect money from corporations who "use up" our commons in any way, either through polluting our air or water, chopping down trees, contaminating the soil or any other usage of the commons. Barnes calls this "commons rent." Those fees would go into three places: towards restoration of the commons (planting trees, cleaning up polluted areas), checks to all citizens and also investments. Yes, he is suggesting that each of us receive a check each year (or month) representing our share of the commons that was used during that period.

Commons trustees would not be government employees and would not have any connection to the government or the current political party in charge. Commons trustees would have a written contract with the U.S. citizenry and future generations that would keep them from violating the commons in any way. Trustees would be appointed by the federal government and then have long terms of duty, similar to Supreme Court justices.

I think this is an interesting idea, and certainly is different than carbon taxes or carbon markets. It has a lot of benefits, but I'm sure it would take a long time to educate people/voters about it. The nice thing is that you could start small, say, just the forests in southeastern Ohio, and then see how the small experiments work and move to bigger goals later.

Systems like this are already in place today. The largest is the Alaska Permanent Fund, set up to allow citizens of Alaska to participate in oil revenues. Each Alaskan gets a check of about $1,000 a year representing their share of the oil taken out of Alaska.

Let me know what you think of these three options. Probably the best idea is to try them all in small ways and see which ones work best.

Peter Barnes' blog is here.


Romeu Gerardo said...

In fact this so call "third option" is very promising and agree with your opinion however it seems to be that carbon markets will be the a step head in terms of reduce greenhouse gas problem. For example, carbon markets are growing in a fast way because it is the only way that if you reduce greenhouse gas you can have an economic profit. In other hand, more and more countries, like in Europe, are committed to bet in carbon markets and if there is no money on the table it is very difficult to convince people to reduce our greenhouse gas problem.

Daryl Kulak said...

Thanks for your very interesting comment, Romeu. I didn't know that European countries were so far down the road with carbon markets.