Cashing In on Air Pollution

Can Americans profit from the biggest polluters?

| September-October 1999

There's a trillion-dollar supply of sky out there, and it's about time Americans started charging rent.

If Peter Barnes has his way, that's just what the federal government will do. Barnes, founder of the Washington, D.C.–based Common Assets Project, argues that the United States should charge polluters rent for allowing them to pump greenhouse gases into the atmosphere. The rent, in turn, should be returned to U.S. citizens under a one-citizen, one-share concept. "Why, after all, should the atmosphere be unequally owned?" Barnes asks in The American Prospect (May/June 1999). "No one lifted a finger to create it. It's indisputably an inherited asset."

What may seem at first glance to be a slightly wacky notion actually is grounded solidly in market theory. The sky as a resource for dumping carbon and other greenhouse gases will become increasingly scarce when the international global climate treaty, signed in Kyoto in 1997, is implemented late next year. At that time, the so-called Kyoto Protocol will begin establishing international trading rules for each nation's carbon emissions. U.S. companies have been trading emissions credits—cleaner firms selling heavy polluters some of their unused atmospheric "storage" space—since the feds began requiring corporations to report toxic air emissions in the mid-'90s. In Kyoto last year, the Clinton administration pushed for a similar international system designed to reward countries willing to reduce greenhouse emissions further than the treaty requires. Such a policy would allow countries to sell to other nations credits for their "excess reductions"; the buyer nations would count the credits in meeting their own targets.

"But left largely unexplored is the question of who will own each nation's domestic rights to emit carbon—and in particular, who will own the rights to America's piece of the sky?" Barnes writes in Yes! (Spring 1999). While Barnes says that some method for allocating rights will emerge, "those rights, however allocated, will grow more valuable as they grow scarcer."

Who should get the rights? Traditionally, he says, government has allowed for privatization of property rights—water, land, and minerals. Large chunks—the ocean and the sky, for example—remain unowned. "This is a world-size problem—and a historic opportunity," he notes.

What's needed, Barnes argues, is a Sky Trust, which would provide each U.S. citizen with an annual dividend from rent collected from polluters. The concept is similar to the Alaska Permanent Fund, established in the 1970s during the state's oil boom. Part of Alaska's oil windfall was invested in public infrastructure, part of it was returned to citizens as an annual dividend, and part of it was invested in a portfolio of stocks and bonds to ensure that citizens would continue to receive a dividend when the oil wells ran dry. The formula: one citizen, one share. In 1998, each Alaskan received a check for $1,540.