THE NEW YORK TIMES – 02/07/09

This article explores the arguments for and against the price (e.g. carbon taxes) vs quantity (e.g. cap-and-trade) approaches to reducing greenhouse gas emissions. So long as scientists lack the sufficient level of certainty about exactly what level of pollution will trigger climate disaster, the price mechanism may have the advantage; at least price targets can provide certainty about how much money will be spent. Setting a price target, however, carries the risk that the price will be wrong. The article concludes that in reality the ‘ultimate test of any system is its design’, whether based on price, quantity or a combination of the two. Read the article…