Cap-and-Trade

Cap-and-Trade

Introduction

Pollution has been the problem for every government for many years as it brings ecological impacts to the economic, political and social system of any country. There is no doubt about the fact that pollution through carbon emission is recognized as an externality that affects the health of individuals as well as mechanism of markets (Karbon, 2011). The cap-and-trade has been recognized as a miracle solution, after helping to reduce pollution from power plants, especially acid rain-related emissions of sulfur oxides formed during combustion of coal in power plants.  International policies to mitigate climate change are often based only on cap and trade to reduce greenhouse gas emissions (Burtraw et al., 2005). It is also a matter of concern that most of the governments are too late to think about to reduce the impact of the cap-and-trade. In fact, it is the politicians who begin cap and trade programs and take actions to address the negative impact of pollution or emission on the climate. In addition, various terrestrial systems react differently to climate change, which certainly will not have the same impact everywhere (Streeter & Hungerford, 2010). Therefore, the monitoring and the use of models may be a crucial tool to tackle soil erosion, loss of biodiversity and water and food crisis. To do this, though, you need a data base of at least ten years.

No one can deny the fact that the "cap-and-trade system" is a form of "self-help" for companies who have common goal to dramatically lower the levels of polluting substances present at the output of their chimney. Researchers emphasize that Governments and institutions need to focus on the development as well as adaptation of policies to address and mitigate the negative impact of pollution and global warming (Streeter & Hungerford, 2010). It can be seen that many countries including the United States attempt to limit greenhouse gas emissions through programs of cap-and-trade as the concept of Cap-and-Trade is an effective tool not only to control or reduce the pollution but also to prevent the negative ecological effects on people, economy and society (Karbon, 2011). This paper aims to support the Cap-and-Trade discussing the logical arguments, examples and benefits of the concept.

Discussion

The Basic Idea

The basic idea for the Cap-and-trade or Emissions Trading Scheme was presented in 1966 by Thomas Crocker, an economics PhD student at the University of Wisconsin. Crocker argued that self-organization would lead to the best results by trading for all players. This also led other researchers to suggest that Pollution, Property and Prices, set up a market for pollution rights in order to limit water pollution by industrial waste (Ellerman et al., 2003). This suggests that a cap on certain issues (e.g., impact of carbon dioxide, sulfur dioxide, nitrogen oxide) is needed for a specific time period in a specific area on regional, national and international basis. This will enable industries to put a limit or cap to control the greenhouse gases or carbon emission or to emit a specific amount of waste (Karbon, ...