A Cap and Trade System: a Solution that Could Turn an Environmental Issue to an Economic Incentive

By: Rebecca Kim

In order to resolve a global issue like climate change, everyone must be involved. Therefore, leaders from different states have the responsibility to convince their constituents to make a difference in regards to climate change. Unfortunately, the realities of politics can prevent leaders from convincing their constituents about the importance of climate change. To explain, every leader’s main goal is to stay in office (or in power) as long as possible. Given the nature of their main goal, leaders of states are driven to please their constituents, especially in democracies where the constituents directly vote the leaders into office. Even in autocracies, there is a type of accountability that controls some of the leaders’ actions; the elites have the power to overthrow the leader if a leader acts on something that every elite disagrees on. Because every leader’s actions must relatively please his or her constituents, leaders must be able to justify their actions.

            However, it can be difficult for leaders to justify the reasons for why people should invest in environmental problems, especially for leaders from developing countries. In other words, people’s primary concern is about their own well-being. Thus, even though environmental issues impact people’s livelihood, most people will focus more on economic or social issues that directly affect their livelihood. Also, in order to please their constituents, leaders are more likely to invest in something that has a positive outcome in the short-run rather than in the long run. Considering that most environmental problems need to be solved in long-term intervals, this could be another reason that causes leader to be hesitant towards supporting environmental issues.

            As a matter of fact, the lack of actions from countries can be seen in current environmental politics. In countries such as China, Brazil, South Africa, and India, the leaders are refusing to set a specific amount of carbon emission reduction in the near future. One of the reasons that China cites to explain their lack of action is because the current carbon emission state was largely caused by the United States and European states. Hence, instead of dividing the current carbon emission burden equally, China argues that the United States and European states should take majority of the burden, which will still give China the chance to industrialize. China is hesitant in supporting environmental problems because reducing their current carbon emission would also mean a reduction in their rate of industrialization. In order to protect the country’s economic interest, China is refusing to support an environmental issue—even though they are fully aware of the dire consequences that carbon emissions can bring in the future.

            Considering that China and many countries alike value economic interests more than environmental interests, this trend, thus, suggests that there must be an economic incentive to persuade countries to partake in environmental issues. To be more specific, one of the reasons why countries could not come to a consensus in the Copenhagen Summit is because the issues discussed were purely driven based on environmental and moral incentives. Relying on moral incentives that emphasize on reducing carbon emission for a better environment is a weak tactic to utilize when the opposing countries primarily value economic development.

         In order to correct one of the flaws in environmental politics that was presented in the Copenhagen Summit, such environmental incentives must be turned into an economic one. By turning an environmental issue into an economic incentive, many opposing countries will be more appealed to partake in an environmental issue. A possible economic incentive to persuade many countries to participate in the carbon emission issue is a cap and trade system.  Even though the cap and trade system also requires a specific limit on carbon emission, the system gives countries the options to either buy carbon emissions from different countries to further industrialize or sell their carbon emissions to make economic gains. The cap and trade system provides economic incentives for countries while reducing the amount of carbon emissions.

The economic incentives that comes from the cap and trade system, as a result, will give more of a justification for leaders to convince their constituents to invest in environmental problems. If leaders are able to illustrate to their constituents that environmental problems have an economic gain, people will be more open to encourage their leader to support an environmental cause, which will lead environmental politics to be more effective.