Tradable rights and the environment

The whys and wherefores of trading systems for CO2 and NOx emission rights, fishing quotas, milk quotas and animal rights: an explanation in the form of 25 questions and answers

In the 1980s, the Dutch government introduced a system of tradable rights as a means of protecting the environment. Tradable rights are permits granted by the government to private companies to do something, up to a given limit, that is or may be harmful to the environment. This may mean emitting carbon dioxide (CO2), owning cattle that produce manure, or catching large quantities of sea fish. The companies holding such permits are entitled to sell them to other companies. This background report describes the conditions that need to be put in place in order for a system of tradable rights to operate effectively.