February 06, 2004

The Benefits of Pollution Markets

European scientists have invented smog eating paint. Now in the classic green model, such paint would be mandated by government rule, costs would rise, inspectors would be appointed, and it would be an awful mess in fighting to get the stuff up on actual surfaces.

With the idea of pollution markets (as the US has advocated since GHWB's presidency) the scenario changes. You prove you have x gallons up on an exterior wall, you have a pollution credit worth X dollars. This makes an incentive to subsidize production up to X-1 dollars, which will lower the paint cost and increase sales. If the some coal plant in West Virginia wants to subsidize a house painting bill, even the most anti-green homeowner will take the deal.

The bottom line is that the paint will be far more widely deployed with less hassle and we'll have a cleaner environment using a market mechanism that most of the green movement had the vapors over when it was established.

HT: Oxblog's Josh Chafetz

Posted by TMLutas at February 6, 2004 08:25 AM