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. 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. 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.
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. 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. 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.