Discussion Paper

State and Local Climate Policy under a National Emissions Floor

Dec 15, 2009 | Dallas Burtraw, William Shobe


This paper describes the nature of inter-jurisdictional relations as they may exist under a federal cap-and-trade program and provides background on the current climate-related activities by state and local governments. State and local governments are uniquely positioned to implement many aspects of an overall climate strategy, and an important question is whether the price signal from a cap and trade program (or a tax) would be a sufficient incentive to do so. The paper examines alternative types of relationships between different levels of government when an agency problem exists, wherein information or incentives for action are not perfectly aligned.