From H2O to CO2: Lessons of Water Rights for Carbon Trading

Interest in climate change has generated many proposals for cap-and-trade programs to control greenhouse gases. Longstanding American water rights regimes may have some lessons for these new proposals. As with water rights, both content and tradability in the new rights regimes are likely to match only imperfectly the goals that we want a cap-and-trade program to serve. For that reason, the historical experience of both water regimes also suggests the important role that surrounding and supporting institutions will play to facilitate trade under imperfect circumstances, and to reassure participants of the standards, accountability, and acceptability of the cap-and-trade regime.