7.15.2008

THE INVISIBLE GREEN HAND

I finally got around to reading a paper by the Milken Institute with the delicious title of "The Invisible Green Hand." As the name suggests, the paper seeks market solutions to climate change problems. My two favorites:

* Pay-as-you-drive insurance. Buying and then insuring a car is a huge fixed cost for most families, after which the variable cost, notwithstanding rising gas prices, is relatively low. $4 a gallon gas is starting to get people to conserve their trips by bundling errands, carpooling, and taking the train; and paying for insurance on a per-mile basis rather than as a flat annual fee would also encourage such conservation. Not to mention that it just makes sense: the less you drive, the less you're exposed to things that require auto insurance.

* Upward tiered utility pricing. Instead of getting a bulk discount for consuming more kilowatts, the per-kilowatt price goes up as you get to higher levels of consumption. Start this revenue-neutral (i.e. consumers initially pay roughly the same monthly amounts), but then watch as people start conserving electricity use to save money.

It's going to take more than a few of these market movers to safeguard our future and our planet. But it's a good start.
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