By Carol M. Rose[*]
Victor Flatt’s “Legislative Temperature” on climate change provides a useful typology of the proposals now under consideration in the U.S. Congress.[1] Professor Flatt ultimately leaves it to us to decide which proposal is “best.” But by tacit consensus, our legislators have already decided one element of the “best” legislation: it will include some version of market-based regulation (“MBR”), in the form of cap-and-trade programs or even (gasp!) taxes.[2] As Professor Flatt suggests, this development could hardly have been predicted from previous pollution control legislation, which generally adopted various kinds of command-and-control regulation.[3]
What happened? Professor Flatt attributes the congressional change of heart to the apparent success of the one notable exception to command-and-control regulation; that was the effort to reduce acid rain through a cap-and-trade regime for sulfur dioxide (SO2) emissions under the Clean Air Act Amendments of 1990.[4] But Congress instituted the acid rain MBR only after a long and increasingly expensive slog through command-and-control regulation. Indeed, cap-and-trade was to act as a kind of relief from the growing costs of pollution abatement through command-and-control methods.[5] This is a typical progression of legislative form; in other areas as well, like controlling overfishing, resource economists have noted that sophisticated MBRs only arrive after more cumbersome regulatory regimes have shown their limitations.[6]
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