Several authors have made different claims regarding the property rights associated with the atmosphere. This discussion is essentially one of fairness and asset ownership. Indirectly, it gets at the question of who

should bear the burden of policies to reduce greenhouse gas emissions. While reviewing various ownership claims, this Essay argues that economics cannot adjudicate among competing claims to the atmosphere. What economics can do is improve our understanding of the economic burdens arising from climate change legislation. In particular, this Essay considers the distributional impacts of carbon pricing as a means to reduce greenhouse gas emissions.

This Essay makes several points. First, the ultimate burden depends on the combination of impacts from carbon pricing along with the impacts of the distribution of revenues (from a carbon tax or auctioned permits) and any freely allocated permits. Any regressivity from carbon pricing itself can be undone through judicious allocation of permits or revenue. Second, measuring the burden of carbon pricing requires knowing how consumers spend their income on carbon intensive products that become more expensive (uses side impacts), and on how their income is eamed when factor prices may adjust in response to carbon pricing (sources side impacts). While uses side impacts appear regressive, sources side impacts appear proportional to progressive. This leads to the third point. Concerns that carbon pricing disproportionately burdens low income households may be overblown. Sources side impacts blunt the regressivity, and allocation of revenues or permits from carbon pricing can undo any remaining regressivity.