Three professors joined us today for an Environmental Panel at the Becker-Rose Cafe today: Shanjun Li, Greg Poe, and David Wolfe . Each of them brought their own unique experiences and knowledge to the table, such as Professor Shanjun Li’s insights into the economics side of climate change. One major point that came up was: How can policy help reduce pollution on a large scale?  Two possible, but very different, policy solutions are the “Taxation” method and the “Cap and Trade” method. In the tax method, a fixed tax is placed on a set unit of volume of carbon emission, so what you pay is directly proportional to how much you pollute. In contrast, a fixed overall level of pollution is established in the Cap and Trade policy and permits-to-pollute are issued. These permits can be traded like any other free market good. It seems as though both options have pros and cons. For example, taxation does not directly place a limit on pollution levels, even though the value/cost of the tax does have an impact on this. A subsequent issue for policy-makers is predicting the ideal tax level to set (I.e. $15 dollars per cubic foot of carbon dioxide emitted, $150 dollars, or $1500?). Contrastingly, Cap and Trade sets a definite limit on pollution, however it treats pollution as a commodity and thus can potentially take away from the negative associations with pollution. Moreover, this method raises the question – who gets the permits? How does does the government go about issuing the permits and allocating how much pollution-rights is granted to permit holders? If a large corporation that pollutes a lot is able to influence government officials who issue the permits, then the Cap and Trade system becomes corrupted and change is not implemented where it is needed the most.

    Whichever option ultimately wins out, I agree with the panel that a lot of countries should take action, regardless of the method they choose. Both policies give “economic players” such as consumers and companies the incentive to take into account when making decisions a very important negative externality – quantity of pollution emitted. If many countries all take a big step and implement climate change-targeting policy, we can indeed affect a positive change. And even though government regulation is extremely critical, we should also remember that people’s rising up and actively fighting for an issue successfully affects change as well. The future of the Earth is in our hands!