Marketable Zoning: A Cure for the Zoning System

Abstract

In 1968, Professor J.H. Dales proposed that, instead of direct government regulation of air and water pollution, the government should simply create a market for the sale of rights to pollute the air and the water? By the 1980s, this view had received much acceptance; the Environmental Protection Agency, for example, was showing strong interest and experimenting with creating new markets to pollution rights. Similar proposals have also been made for the creation of private markets for ocean fishing, broadcast licenses, ground-water, and other natural resources. In each case, the ability to use these resources is now allocated by government through a regulatory permit system. But also, in each case, it is proposed that a private market would perform this allocative role more efficiently and effectively. These examples are part of a much broader national—indeed worldwide—trend toward reexamining the relative economic roles of government and the private market, and considering whether the market mechanism might not do a better job of allocating resources.