Question

An initiative is started to form a climate agreement between several countries. Which would be the most effective strategy for this agreement to work?

		Use a global uniform carbon tax.
		Implement pollution permits granted to each participant based on its historic pollution
		Tie membership in the agreement to free-trade and other cooperative agreements.
		Require emissions caps with fines to country that break them.

Answer 1

The most effective strategy would be to use a global uniform carbon tax. To increase the price of carbon can be seek as the most effective way to reduce air pollution. Pricing carbon is being globally accepted as the right strategy to bring down emissions and also induce economies to switch to investing in cleaner technologies. When there is a global carbon tax imposed, nations aim at keeping their emission levels at the bare minimum.

The other options are not feasible because of their limitations. Pollution permits are not equitable because richer countries can pollute more by buying the permits from the poorer nations. This is why they are not efficient. This is not fair to the poor nations because they have to give up on growth opportunities. The option to tie membership to free trade agreements will also not induce the economies to reduce their emission levels. Setting emission caps is not completely possible because it will be hard for the agencies to determine what should be the efficient level of cap for each nation. Another issue is that it doesn't induce the nation to reduce the emissions, they continue to emit until their cap level which makes them less efficient when compared to carbon tax. Carbon tax overcomes this issue because as per this strategy, every unit of carbon is priced, so the economy has an incentive to reduce their emission levels.