Jeff Gates on who deserves the value of the atmosphere
|January 9, 2007||Posted by Staff under Archive, Progress Report, The Progress Report|
You Deserve A Fair Share
New Assets to be Owned
by Jeff Gates
The quality of the gaseous bubble that surrounds the earth is hugely important to the quality of life on earth. Our use of fossil fuels has put that domain at risk. For example, we Americans blow about 1.5 billion tons of carbon into the air each year. The sky may already have reached its absorptive capacity for acid-brewing sulfur, ozone-eating chlorine and heat-trapping carbon-dioxide. Oil is no longer in short supply. Sky is. Yet because the atmosphere has no owner, it’s treated like a common sewer. That helps keep energy prices low because, when you buy gas at the pump, there’s nothing factored into the cost for the use of the atmosphere.
Our demand for skyborne carbon storage is the flip side of our demand for fossil fuels. We pay for oil used because we assign property rights to its use. We don’t pay for air to hold its combusted residues, but that’s because only recently has it become clear that atmospheric capacity is scarce. The era of free sky is over. The question is how best to regulate its use. Property laws have traditionally been used to allow owners of scarce things to charge other people for using them. That could be done for the atmosphere much the same as it’s now done for land and water use. What’s required is that we create atmospheric property rights and then assign them to proper owners. Therein lies both the opportunity and the danger.
A recent study by DRI/McGraw-Hill put the value of U.S. carbon absorption capacity at hundreds of billions of dollars per year throughout the early twenty-first century, making this ownerable asset a potential multi-trillion dollar treasure trove. One intriguing aspect is that the value of the sky rises as emission caps are lowered because of the scarcity factor (people will pay more to use a limited resource). That also means owners of these property rights will collect more income when emission caps are lowered, thereby aligning interests in conservation and income.
This is where an Alaska or GSOC-like model might be put to good use, transferring this property right provided everyone in the nation is made a beneficiary. Indeed, we may find that the best way to preserve the atmosphere is not to regulate it but to price it. By ensuring that consumers pay not only for goods but also for “bads,” this approach could ensure that atmospheric scarcity is factored into the price of fossil fuels, with that extra cost becoming income to those who own a stake in this newly created property right.
One key challenge here lies in ensuring that the carbon club (the oil companies) do not claim this property for themselves. Under the Clean Air Act of 1990, coal-burning companies are allowed to trade sulfur emission permits among one another, allowing the industry as a whole to find the cheapest way to reduce overall emissions. Those permits now trade at the Chicago Board of Trade alongside grains, stock index futures and pork bellies. What has happened with sulfur could now happen with carbon and other gases. Whoever owns these emission rights will become the landlords of the sky, charging a fee for the right to use the scarce absorptive capacity of our commonly inherited atmosphere.
This idea comes along at a time when needed. Not only do we need a new approach to control pollution, we also need to find a new way to capitalize our grossly undercapitalized population. Consider that President Bill Clinton’s plan for Universal Savings Accounts is projected to cost $450 billion over 15 years. Similarly, Senator Bob Kerrey of Nebraska proposes diverting $250 billion in Social Security taxes over the next 15 years to create a savings account for every newborn child ($1,000 at birth plus $500/year until age five). Yale professors Bruce Ackerman and Ann Alstott propose an even grander plan in The Stakeholder Society, relying on a wealth tax to create universal nest eggs.
This is quite different. In essence, the idea is to create monetary goods by ensuring that people pay for pollution. Projections suggest that the proceeds could easily exceed $1 trillion over the next 15 years, more than the Clinton and the Kerrey plan combined. Plus the revenue wouldn’t depend on iffy budget surpluses, transfers from Social Security or new taxes on anything. Instead, it would rely on the very Jeffersonian idea of small-scale property rights created from the commons (the atmosphere) and assigned individually to all those with a stake in the commons.
Also, unlike a tax on pollution, which would have a drag on the economy, this mechanism would bypass the U.S. Treasury, relying on the concept of atmospheric rents (which would raise energy prices) but with those rents paid out to citizens as taxable income for them to spend as they wish.
Rather than an economic drag, the effect should be to reduce the use of pollutants while stimulating either consumption or saving (the dividends paid to children could be put in an education trust account). Of course, this is an overly simplistic explanation of a much more complex and multi-layered subject that involves not only the interests of U.S. citizens and other developed countries (the key polluters) but also the interests of lesser developing countries who can be expected to resist the notion of any restraint on their development due to a repricing of energy.
for more information on similar ideas, visit the Citizens Dividend web site
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