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Pollution trading doesn’t solve our pollution problems—it just spreads them around. Worse, in the case of water, it undermines proven regulations that have effectively protected our environment.
Pollution Trading
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Whether it’s manure run-off from factory farms or greenhouse gases released into the atmosphere, industrial activity increasingly contaminates our water and air. We must hold polluters accountable if there is any hope of addressing the major threats to our environment and drinking water.

Unfortunately, many in the environmental movement have adopted support for “market-based” schemes like pollution trading (also known as “cap-and-trade”), which essentially give companies a right to pollute, rather than hold them liable for reducing pollution.

What Is Pollution Trading?

Pollution trading is a form of privatization that undermines key democratic principles that define how our common resources have been managed for centuries, for the common good.

Pollution trading principles assert that market-based schemes can control pollution — even though protective regulatory oversight of pollutant sources under federal laws like the Clean Water Act and the Clean Air Act has been improving waterways and the air for decades. Pollution trading undermines these protections by allowing polluters—like factory farms or power plants—to buy and sell from one another the right to pollute our air and water.

Under our current laws, polluting is a crime. Under pollution trading, polluting becomes a privilege for corporations with deep enough pockets to purchase the right to pollute.

Buying The Right To Pollute

Theoretically, under a pollution trading scheme, a “cap” is placed on how much overall pollution is allowed into our air and waterways. Polluters that don’t want to spend money or effort controlling their own discharges to meet their own share of this cap can instead acquire credits from other polluters that claim to have reduced their contributions. This approach scuttles our current system of holding each polluter accountable for its actions in favor of a convoluted and fraud-friendly system of credit swapping and market manipulation.

In addition to seeking out questionable credits from others that may or may not have actually reduced their own pollutant loads, polluters that don’t want to control their discharges can look to “offset” their own contributions by paying someone somewhere to implement pollution-reduction practices. For example, a coal-fired power plant may not want to spend the money to curb its own greenhouse gas emissions, so instead it might fund a forestation project on the other side of the country to act as a “carbon sink” and absorb carbon.

The Problem With Offsets

As is often the case with pollution credits, verifying offsets is nearly impossible. As a result, many offsets may not represent an actual reduction in pollution loads, but are still used as a way for polluters to avoid cleaning up their own mess.

The use of faulty offsets instead of direct emissions controls makes the chance of realizing net reductions low. Moreover, communities close to those companies that continue polluting at the source face increased serious health and environmental impacts.

Cap-and-trade systems essentially make pollution a commodity through credits and offsets that allow for financial corporations to profit from polluting industries.

Water Pollution Trading Is Illegal Under The Clean Water Act

The Clean Water Act, and other air and water laws, are based on the notion that it is illegal to pollute, and provide stringent rules to stop pollution from entering the environment. Pollution trading, on the other hand, turns on its head the notion that pollution is illegal and gives industries the right to poison our air and water.

Our legal arm, Food & Water Justice, is fighting to preserve our environmental laws and keep the marketplace out of pollution control. We are raising challenges to water pollution trading in several states and ultimately seek a ruling in the courts that water pollution trading is illegal under the Clean Water Act. Learn more about Food & Water Justice. 

Related Downloads

  • Report: Water Quality Trading: Polluting Public Waterways for Private Gain

    Report: Water Quality Trading: Polluting Public Waterways for Private Gain
  • Issue Brief: The Truth About Offsets

    Issue Brief: The Truth About Offsets
  • Report: Bad Credit

    Report: Bad Credit
  • Issue Brief: No Accounting for Taste: Natural Capital Accounting and the Financialization of Nature

    Issue Brief: No Accounting for Taste: Natural Capital Accounting and the Financialization of Nature
  • Issue Brief: Pollution Trading

    Issue Brief: Pollution Trading
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