Tradable permits have been used in: (a) the control of non-point-sources of water pollution in the USA; (b) the control of acid rain precursors in the USA; (c) the control of air pollutants in Germany in a system that also allows the trade of emission permits for one pollutant for those of another, providing they have similar environmental effect; (d) Canada, which is also investigating the trading of NOx, SO2 and volatile organic compounds in certain heavily polluted areas; (e) Poland, which is setting up a tradable permit system for pollutants, having investigated and rejected a system of emission charges; (f) the control of over-fishing in New Zealand; and (g) the overproduction of milk in the EEC/EU.
Tradable permits have yet to be used in international settings. The basis on which to allocate permits is a key issue in the operation of an international tradable permit system. The initial allocation, is not likely to affect the efficiency of the system: however initial permits are allocated, the trading that subsequently occurs works to ensure that the system operates at minimum cost to the participants. Furthermore trading will tend to transfer resources from the richer nations, where the cost of finding alternatives is generally high, to the poorer ones, where it is generally lower. Only two parameters have therefore to be considered in the initial allocation: what would be fair or equitable, and what would countries accept ? There are two ways of approaching the situation: the first is to define equitable allocation systems, and then investigate their acceptability. The second is to examine acceptable systems, and then analyse their implications for equity.