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Environmentalist Talks the Price of Pollution

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Tom Fudge : What should we charge people to pollute? This has become a very serious question in a day when global warming has emerged as the greatest environmental threat we face. It's nice to think we can appeal to the collective good conscience, and rely on people to do the right thing… cutting down on carbon emissions voluntarily. But as long as it’s cheap and easy to use a lot of resources, that's what people tend to do, whether the resource is water, food or fossil fuel.

Pricing seems to be the most efficient way to enforce rationing. Some people think a carbon tax is way to make fossil fuels adequately expensive, but then there's also cap and trade. The idea here is you set a strict limit on the fossil fuel emissions society allows. Then you allow companies that cut their emissions below that limit, to sell a carbon allowance that they earn, to other companies for a profit. That means some companies will keep polluting... but only at a price.

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