Implementing Domestic Tradeable Permits

Recent Developments and Future Challenges

Tradeable or transferable permits (TPs) are increasingly perceived as a cost-effective and flexible policy instrument for pollution control and natural resources management. Initially they were considered a policy tool whose applications were limited to only certain sectors, such as air pollution management and fisheries. However, over the last few years, there have been significant developments in the use of domestic TPs, across a broader range of environmental issues. TPs now face a double challenge: could they become a key instrument for curbing greenhouse gas emissions in light of the Kyoto Protocol? And could they be used in other areas of environmental management?

This book presents the proceedings of an OECD workshop on domestic TPs held in September 2001 in Paris. It provides an analysis on recent developments in the use of domestic TP in new areas including climate change, renewable energy, transport, solid waste management, and water resources management. It highlights issues regarding the use of TPs in policy mixes, reviews key elements of ex post evaluations of earlier TP schemes, identifies key challenges in the design and use of TP systems, and attempts to link the past lessons to further research needs.