The One Percent Problem

Abstract

Parties frequently seek exemption from regulation on the ground that they contribute only a very small share to a problem. These one percent arguments are not inherently questionable; it can be efficient to exclude relatively small contributors. These arguments for exemption garner broad acceptance in part because they appeal to behavioral biases that induce individuals to discount or ignore small values. But when a regulatory problem can be solved only by regulating small contributors, accepting one percent arguments creates what we call the one percent problem. This Article shows that this general problem for regulation has particularly damaging effects on climate change policy: The global character of the climate change problem renders many sources of carbon emissions candidates for one percent arguments, but the climate problem cannot be solved without attention to these sources. This Article then isolates a gap in U.S. climate policy that is critical to addressing the one percent problem for climate. Unlike many other bodies, Congress currently legislates and appropriates without calculating the emissions consequences of its actions or adhering to an emissions budget. Both are necessary. Congress has long responded to one percent problems in managing the federal budget with disclosure and offsetting requirements. Requiring Congress to disclose the carbon emissions of legislation treats carbon costs on par with financial costs, and brings Congress’s emissions disclosure duties in line with those that already apply to federal agencies and many industrial sources. Adopting a budgeting pre-commitment strategy of last resort - a carbon pay-as-you-go rule - directly confronts the analytic slippage exploited by one percent arguments.