ECON 200 University of Southern California California Cap and Trade System Discussion ***ABSOLUTELY NO PLAGIARISM, I NEED ORIGINAL WORK!!!*** *Please give

ECON 200 University of Southern California California Cap and Trade System Discussion ***ABSOLUTELY NO PLAGIARISM, I NEED ORIGINAL WORK!!!***

*Please give a concise approximately 200 word response. No more than 230 words.*

Grade on the assignment will be determined by:

(1) the clarity of your response,
(2) the organization/grammar,
and most importantly (3) *the strength of arguments*.

When it fits, make sure to use these terms:
Environmental Economics, Production, Optimal Production, Optimal Level,

Emissions, Total World Emissions, Cost, Equilibrium Output
Prompt: (To fully understand prompt, please make sure to read all helpful sources

provided)

California (CA) is often cited as the leader in climate policy within the U.S. and in 2013 the state launched its cap and trade system (hereafter referred to as CTS) which regulates six different types of emissions for industrial and energy sectors within the state. These two sectors account for an estimated 85% of all emission sources within the state.

The main appeal that market based policy instruments like a CTS (another example is a pigouvian tax) has is that it theoretically achieves an environmental goal at the
least cost to society. In other words, polluters that can reduce pollution the cheapest
will do so before those who can only do so at a high cost under a market based policy instrument.

Question 1:

Proponents of CA’s CTS claim that the system is a success, reaching CA’s annual emissions targets at least cost. What assumptions must hold for this claim to be true?

Question 2:

Suppose that the CA’s CTS is able to achieve any environmental target at least cost. Why might there still be an optimality issue?

In other words, even if CA’s CTS can achieve a cap at least cost, Why might this system still fail to achieve the optimal level of greenhouse gases?

Helpful Sources: (You will need to copy and paste each link into your browser)

To learn more about CA’s CTS, here are some helpful links:

https://www.c2es.org/content/california-cap-and-tr…

https://www.edf.org/sites/default/files/californias-cap-and-trade-program-step-by- step.pdf

https://www.pbs.org/newshour/science/california-cap-and-trade-is-working-for-other- states

For more background on what a general CTS is here is a helpful link, https://www.edf.org/climate/how-cap-and-trade-work…