Policy Proposal for Pollution

After studying policies and regulations in my Public Policy class, I have created a brief policy proposal for the environment in regards to the government.

Due to the effect of the tragedy of the commons, where every individual tries to reap the greatest benefit from a given resource, the earth is spiraling towards a global climate catastrophe. Industrialization has introduced mass amounts of greenhouse gases into the atmosphere, which is warming the earth, and alarming citizens and governments. Several governments have tried to put policies into effect to reduce the output of greenhouse gasses into the air. These policies are: a “cap and trade” system, a “fee and dividend” system, and rigid emission limits. I would argue that the fee and dividend system would be the most effective to reduce the prevalence of greenhouse gasses.

Before I make my argument, it is important to briefly explain the cap and trade system and emission limits. A cap and trade system puts a cap on emissions for every polluter, and imposes strict fines if a polluter goes over this cap. If a polluter pollutes less than their cap, they can sell their excess cap space to an over polluter, therefore rewarding the ‘cleaner’ polluter and punishing the over polluter. Some governments are issuing hard caps as well and punishing companies that do not comply with the ever-shrinking cap. Both of these systems do punish the polluters, but these companies will just pass on their costs to the consumer, therefore punishing citizens, instead of the polluters.

This argument is why I believe a “fee and dividend” system is the optimal system to help limit pollution. This is how the fee and dividend system works: The government fines polluters on the carbon content of the fossil fuels that they use. These costs are passed on to the consumer, and using simple economic principles, one can assume use of these polluter’s products will go down because of the increased cost. Then, the fines collected by the government are distributed back to citizens to help them with the price increases. The increased price of carbon causes people to use less and spurs investment in cleaner tech and renewable energy.