This essay provides an overview of the major emissions trading programs of the past thirty years on which significant documentation exists, and draws a number of important lessons for future applications of this environmental policy instrument. References to a larger number of other emissions trading programs that have been implemented or proposed are included.
- Cap and trade has proven to be environmentally effective and economically cost-effective relative to traditional command-and-control approaches.
- Cap-and-trade instruments are now considered for a wide range of environmental problems, ranging from endangered species preservation to global climate change.
- Cap and trade merits serious consideration when regions, nations, or subnational jurisdictions seek to develop policies to reduce greenhouse gas emissions.
- Thirty years of experience with cap-and-trade systems with a variety of designs has implications for future applications.