Two world views on carbon revenues

  • Dallas BurtrawEmail author
  • Samantha Sekar


The introduction of a price on CO2 is expected to be more efficient than prescriptive regulation. It also instantiates substantial economic value. Initially, programs allocated this value to incumbent firms (grandfathering), but the growing movement toward auctioning or emissions fees makes carbon revenues into a payment for environmental services. This paper asks to whom should this payment accrue? If the atmosphere resource, as a common property resource, is viewed as the property of government, then the decision of how to use the revenue can be viewed as a fiscal problem, and efficiency considerations dominate. If the atmosphere is viewed as held in common, then the revenue might be considered compensation to owners and delivered as payment to individuals. This decision has efficiency and distributional consequences that affect the political economy and the likelihood and durability of climate policy. We summarize trends among six existing carbon-pricing programs.


Auction Cap and trade Emissions fee Emissions tax Allocation Grandfathering Climate change Policy 
JEL Classification H23 N5 P48 



The authors gratefully acknowledge the financial support provided by the FORMAS project Human Cooperation to Manage Natural Resources. The authors benefited from comments made by Peter Barnes, Eban Goodstein, Molly Macauley, Brady McCartney, Richard Morgenstern, William Shobe, and an anonymous reviewer.


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Copyright information

© AESS 2013

Authors and Affiliations

  1. 1.Resource for the FutureWashingtonUSA

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