THE first deal to trade pollution permits has been signed in USA. This fortnight, two American power plants have agreed to buy from the other the right to emit sulphur dioxide. The Tennessee Valley Authority (TVA) will buy the right to emit 10,000 tonnes of sulphur dioxide, the main cause of acid rain, from Wisconsin Power and Light. Wisconsin will reduce its emissions to a level 10,000 tonnes below what the law requires, and TVA will get additional time to reduce its pollution. The price which was not officially disclosed is believed to be US $2.5 million or US $3 million. This market-based solution provides a set of incentives and disincentives to keep pollution at acceptable levels.