Question

Why are tradable permit systems viewed as preferable to standards and taxes in reducing pollution emission and pollution concentration levels?

Answer 1

A tradable permit system is indeed a tool to control pollution and allows the market to direct (typically) environmental efforts where a market does not naturally exist on the whole. It involves a three-step process

1) First, scientists get to provide information and also the recommendations concerning the physical impacts of a pollutant and the environment’s capacity to absorb it on the whole.

2) Second, the government decides on what limits will be placed as well as the emission on the whole.

3) Third, the permits are either auctioned to the highest bidder or given to existing polluters which are also proportionate to the baseline emissions on the whole.

Due to all these reasons and it follows a systematic process, it is better reducing pollution emission and pollution concentration levels