You’re the second person to make a comparison to carbon credits, but that’s totally different. As I understand it, the source of carbon credits is totally dubious in the first place and they’re only valuable to the extent that they ease liberals’ guilt. You don’t even need them to fill up your car or anything. I’m talking about a system where instead of spending dollars to get water, you’d have to spend water credits. As I replied to that other person:
I’m talking about government controlled rationing. A committee of geologists and engineers and whatnot determine what could be sustainably drawn from each water source, add it up, and divide it among the population.
And that’s what carbon credits are, they’re essentially a license to emit a certain amount of pollution. Your water credits would be a license to use a certain amount of water. It’s the same thing, with the main difference being the justification for the amount of credits available.
If you charge based on use, people will adjust their usage to match their budget. If you distribute credits, people won’t need to optimize unless they’re going to run out. So to get reduction with credits, you basically have to keep reducing how many credits you give out, and deciding who gets the reduction can quickly become political.
So that’s why I prefer to just charge based on use. It’s simpler and has fewer conflicts to worry about. Cities can set a rising rate based on use, so the more you use, the more each additional unit of water costs. That way heavier users have a larger incentive to cut back than lighter users, which is as it should be.
If my idea for water rationing were applied to greenhouse gas emissions, the way it would work is that fossil fuel companies would not be permitted to take any coil, oil, or gas out of the ground unless they could pay for the privilege with special credits to do so. The government would ration these credits to the public so as to create a hard limit on total fossil fuel extraction. The current carbon offset system doesn’t have any hard limits as far as I know.
There are caps though. My understanding is that companies get X credits, and they can sell any they don’t need to other companies, and X reduces over time. AFAIK, companies don’t create new credits, they merely trade them on the market as a finite resource.
I assume if you go over your carbon allotment, you pay a hefty fine.
If the government wants less carbon emissions, it reduces the number of credits available on the market or increases to tax credit for unused credits.