ANDREW P. MORRISS, University of Illinois College of Law, PERC - Property and Environment Research Center, George Mason University - Mercatus Center
Email: morriss@law.uiuc.edu

Modern discussions of natural resources focus on increasing public control over extractive industries proposing measures that range from increasing the public's share of the gain via royalties and taxes to regulating extractive activities to prevent environmental problems to outright expropriation of private investments. This Article argues that such efforts are counterproductive because the fundamental economic problem of natural resources is producing the knowledge necessary to locate and extract resource deposits. The public benefit comes from enabling the use of the resources and the increased economic activity their discovery produces rather than from royalties or expropriation. The key question in designing natural resource laws is thus their effects on the incentive to discover and manage resources. Private property rights in natural resources are the best way to provide such incentives. Fortunately, the combination of property rights and tort law principles (trespass and nuisance) enables property rights to solve environmental problems related to natural resource extraction as well.

J. B. RUHL, Florida State University College of Law
Email: jruhl@law.fsu.edu
JAMES SALZMAN, Duke University - School of Law
Email: salzman@law.duke.edu

Mandates that agencies solve massive problems such as sprawl and climate change roll easily out of the halls of legislatures, but as a practical matter what can any one agency do about them? Serious policy challenges such as these have dimensions far beyond the capacity of any single agency to manage effectively. Rather, as the Supreme Court recently observed in Massachusetts v. Environmental Protection Agency, "agencies, like legislatures, do not generally resolve massive problems in one fell swoop, but instead whittle away over time, refining their approach as circumstances change and they develop a more nuanced understanding of how best to proceed." In this Article we explore what it means for agencies to whittle away at massive problems. Administrative law scholarship and practice have largely assumed that massive problems are similar to one another, focusing on jurisdiction and instrument choice - who should whittle and which knife they should use. We argue that the nature of the problem - the stick to be whittled - is even more important. What makes some problems massive and particularly difficult to address other than by whittling is the presence of cumulative effects, in particular the spatial and temporal accumulation of economic, environmental, and social impacts from multiple sources. We develop a model to identify how different types of cumulative effects problems can distort or undermine policy responses. Using examples from the fields of environmental and land use law, we provide both theoretical and practical counsel for agency decision makers confronting a massive problem. Doing nothing is not an option for an agency assigned to whittle away at a problem, but having every agency exercise its maximum regulatory power may be even worse. As the Supreme Court suggested, agencies may have no choice other than to whittle, but they can do so more effectively if they focus on the nature of the problem. This article shows how to do so.

JOËLLE DE SÉPIBUS, University of Fribourg
Email: joelle.desepibus@unifr.ch

The so-called 'Linking'-Directive adopted in 2004 does not impose any limit on the import of JI and CDM credits under the European Union Emissions Trading Scheme (EU ETS), but requires from the Member States to set, in accordance with their 'supplementarity' obligations under the Marrakesh Accords, the maximal amount of Kyoto 'units' each covered installation is entitled to use for compliance under the scheme. Fearing a second price collapse of the European Union Allowance, the Commission decided, however, in 2006 to impose strict limits on the use of JI and CDM credits during the second trading period. This paper examines the legal basis of the Commission's decision and explores further the international and European legal framework within which the current debate on the use of JI and CDM credits and post-2012 international offsets takes place. It analyses in particular the recent proposal of the Commission on the third trading period of the EU ETS and the related report of rapporteur Doyle of the European Parliament and discusses the necessity to introduce quantitative and qualitative restrictions on the use of international offsets within the EU ETS against the backdrop of the international negotiations on a new global deal on climate change.

A. DENNY ELLERMAN, Massachusetts Institute of Technology (MIT) - Sloan School of Management
Email: ellerman@mit.edu

The European Union's Emission Trading Scheme (EU ETS) is the world's first multinational cap-and-trade system for greenhouse gases. As an agreement between sovereign nations with diverse historical, institutional, and economic circumstances, it can be seen as a prototype for an eventual global climate regime. Interestingly, the problems that are often seen as dooming a global trading system - international financial flows and institutional readiness - haven't appeared in the EU ETS, at least not yet. The more serious problems that emerge from the brief experience of the EU ETS are those of (1) developing a central coordinating organization, (2) devising side benefits to encourage participation, and (3) dealing with the interrelated issues of harmonization, differentiation, and stringency. The pre-existing organizational structure and membership benefits of the European Union provided convenient and almost accidental solutions to the need for a central institution and side benefits, but these solutions will not work on a global scale and there are no obvious substitutes. Furthermore, the EU ETS is only beginning to test the practicality of harmonizing allocations within the trading system, differentiating responsibilities among participants, and increasing the stringency of emissions caps. The trial period of the EU ETS punted on these problems, as was appropriate for a trial period, but they are now being addressed seriously. From a global perspective, the answers that are being worked out in Europe will say a great deal about what will be feasible on a broader, global scale.

DALE B. THOMPSON, University of St. Thomas, University of St. Thomas - Ethics & Business Law
Email: thompsondaleb@yahoo.com

This article presents a framework to analyze federalism based on enactment, implementation, and enforcement institutions. The framework provides a mechanism to determine whether a particular public policy should be conducted at a state or federal level, by examining economies and diseconomies of scale inherent in each of these institutions. This article then applies the framework in a comparison of environmental policies for wetlands and endangered species, and in an analysis of a health care policy. These applications can then serve as guides to legislators and judges in analyzing federalism concerns.

ZHONGXIANG ZHANG, East-West Center - Research Program
Email: ZhangZ@EastWestCenter.org

China has been the world's second largest carbon emitter for years. Recent studies show that China had overtaken the U.S. as the world's largest emitter in 2007. This has put China on the spotlight, just at a time when the world community starts negotiating a post-Kyoto climate regime under the Bali Roadmap. China seems to become such a Christmas tree on which everybody can hang his/her complaints. This paper will first discuss whether such a critics is fair by examining China's own efforts towards energy saving, the widespread use of renewable energy and participation in clean development mechanism. Next, the paper puts carbon reductions of China's unilateral actions into perspective by examining whether the estimated greenhouse gas emission reduction from meeting the country's national energy saving goal is achieved from China's unilateral actions or mainly with support from the clean development mechanism projects. Then the paper discusses how far developing country commitments can go in an immediate post-2012 climate regime, thus pointing out the direction and focus of future international climate negotiations. Finally, emphasizing that China needs to act as a large and responsible developing country and take due responsibilities and to set a good example to the majority of developing countries, the paper articulates what can be expected from China to illustrate that China can be a good partner in combating global climate change.