Evaluation of offset schemes with a laboratory experiment

Introduction Among the many types of environmental policies and systems, tradable allowance schemes are considered to be effective; under these systems, the rights to utilize the environment or resources are transacted in the market. One typical scheme is the cap-and-trade scheme which has been considered to reduce the environmental burden efficiently. In fact, many theoretical and empirical studies have proven the effectiveness of tradable allowance schemes (for example see OECD 2000). For example, emission-permits trading schemes have been spreading during the past two decades. The United States first introduced this type of scheme for sulfur dioxide (SO2) in 1990, and it succeeded in reducing SO2 emissions by half. After that, other types of emission-permits trading schemes have been introduced in the United States, the European Union, and the United Kingdom. The market scale of the EU-Emissions Trading Scheme (EU-ETS), which began in 2005, is large; the permit price is used as an indicator in other policy measures for climate change.