Abstract

A recurring theme in Thomas Tietenberg's research is that pragmatism should guide the design of economic policy instruments for reducing environmental pollution. Tietenberg was among the first to argue that incentive-based policies that are informed by economics research on practical implementation problems, while not perfect, are the most effective policy tool for controlling pollution. The wisdom of his position has been borne out in many emissions trading programs that have been implemented successfully in the past 40 years. Nevertheless, there have been setbacks. For example, the nation's first cap-and-trade program for controlling local air pollution (RECLAIM) has been terminated. This fate was not because RECLAIM's history revealed some fatal flaw in emissions trading, but instead was the consequence of decisions about the program's design and operation that ignored the practical prescriptions that Tietenberg and his contemporaries had proposed decades earlier.