Monday, August 27, 2007

Cap-and-Trade for Water?

Is water the new carbon?
Four years ago, the Chicago Climate Exchange was created as a way for companies to buy “carbon credits” to offset their greenhouse gas emissions. The market broke new ground by providing industries with a way to reduce their total emissions — either directly or indirectly — at the lowest possible cost.

Today, carbon trading and is [sic] estimated to be a nearly $790 billion marketplace with individual, corporate and government participants. Now at least one member of the Chicago Climate Exchange sees a similar future in solving a more immediate environmental challenge: water pollution and shortages.

“When I got involved in carbon offset development, it became obvious that water was potentially a bigger market than even carbon,” says John Regan. Regan founded the Environmental Credit Corp., a carbon-credit supplier on the Chicago Climate Exchange; he is also the chairman of Biofinancial Corp., a Santa Cruz, Calif.-based family of hedge funds. “Carbon reduction is a relatively slow evolution,” Regan says. “It takes 25 to 50 years before you see the impact of what you do today. If you don’t solve the water impacts in five years, you’ll have a crisis on your hands.”
MORE from Sustainable Industries.

These trader types (mandate a market and we'll figure out how to trade it. Mandate+Market= non-sequiter at best) have nothing on the economist types at Division of Labor for pattern recognition:

August 21, 2007
Markets in Everything: Birth Permit Edition

A letter to the editor (scroll down) from this week's issue of The Economist:

SIR – You provided an interesting analysis of how specific market factors can indirectly influence population growth. However, your initial assumptions, of undistorted commodity markets and no environmental scarcity, led you to ignore a logical conclusion. The market needs to be directly harnessed towards the goal of stabilising population growth at a sustainable level. This could be achieved through a cap-and-trade system by issuing each adult with 1.05 of a birth permit (ie, 2.1 permits per couple to achieve the replacement fertility rate) and allowing such permits to be tradable.

Adam Drucker
Charles Darwin University
Darwin, Australia

Good grief, mate, this is one of the scariest notions I've seen in awhile. Would there be forced abortions for people not having a permit for a third child? Would people be thrown in jail for a third child if they didn't get permits?

BTW, while scrolling down you might have noticed Jeff Sachs attributing over-fishing and similar ills to overpopulation (hey, Jeff, ever heard of property rights, institutions, and the like?) and two Berkeley profs connecting nuclear weapons and terrorist cells to rapid population growth in Pakistan. In short, we see from all three letters exactly what Bryan Caplan calls the Malthusian zombie.

HT to MR for the markets in everything notion even though I shouldn't refer to such a coercive scheme as a market.

Posted by E. Frank Stephenson at 07:15 PM in Economics