Who Owns The Sky?

Who owns -- or should own -- the sky? In the coming era of scarce sky, the answer will affect every American's pocketbook. The answer will determine to whom we and our children -- and every generation of Americans thereafter -- pay sky rent. It's nothing less than a trillion dollar question.

Practically speaking, there are three possible beneficial owners of America's chunk of the sky: private corporations, the federal government and citizens through a nationwide trust.

Corporate ownership isn't as far-fetched as it might seem. U.S. history has been marked by numerous giveaways of common assets to private corporations, from the enormous land grants to railroads in the 19th century to the recent gift of spectrum to broadcasters. The standard argument used to justify such largesse is that, in exchange for common assets, the receiving corporations deliver a quid pro quo of public value: they build railroads, extract valuable minerals or transmit sharper TV images.

Whether past in-kind investments of this sort were good deals for the public is debatable. But there's no doubt a future gift of carbon storage capacity to private corporations would be a terrible investment. There's nothing we'd get in return. Such a gift would be a pure handout, like giving away offshore oil for free.

Fortunately, there's another way to own the sky -- a citizen's trust fund similar to the Alaska Permanent Fund. My proposal can be boiled down to this: what Alaska did with oil, the whole country should do with sky.

Why is Alaskan-style citizen ownership of the sky preferable to corporate or government ownership? One reason is essentially religious. It rests on a belief that the sky is a gift from our common creator. It wasn't given to a government, and certainly not to private corporations. We, the meek, are its inheritors. If it turns out this gift is worth real money, well, that money belongs to us and our heirs.

A second reason has to do with values and priorities. Federal ownership of the sky would strengthen the apparatus of the state; citizen ownership would strengthen families and children. If we truly believe that families and children are the bedrock of our society, we should design our institutions and allocate our resources accordingly.

A third reason is that the sky is nothing if not the ultimate commons -- we all inhale from it, exhale into it, and use it daily in many other ways. On the theory that use implies ownership, or simply that commoners own the commons, the sky should be our common property.

How A Sky Trust Would Work

The Sky Trust is a cap-and-trade system in which the initial emission rights are given to a trust, which sells them to polluters and distributes the revenue to all citizens equally.

You can look at the Sky Trust as both a civic institution and a mechanism for recycling scarcity rent. As a civic institution, it would embody our common ownership of a shared inheritance. Its trustees would have three legal responsibilities: (1) to issue carbon permits up to a limit established by Congress; (2) to receive market prices for those permits; and (3) to distribute the income equally. In the event of a conflict between these responsibilities, preservation of the sky would take precedence.

The other way to view the Sky Trust is as a scarcity rent recycling machine. We, the users, pay scarcity rent for the sky because -- well, because it's scarce. We, the owners, then get back our share of the scarcity rent because -- well, because we're the owners. In terms of money in and money out, the whole thing's a wash. But for you, me and millions of other individual citizens, the recycling of scarcity rent can make a big difference.

Think of it this way. If carbon emissions are limited, the effect is the same as limiting the supply of fossil fuels. That's what OPEC did in the 1970s, and you know what happened. Without a Sky Trust, the higher prices from limiting carbon emissions would be a windfall for oil companies and their shareholders. With a Sky Trust, we'd return the scarcity rent to its rightful owners -- ourselves.