Consider the perverse effect cap and trade has on altruistic actions. Say you decide to buy a small, high-efficiency car. That reduces your emissions, but not your country’s. Instead it allows somebody else to buy a bigger S.U.V. - because the total emissions are set by the cap.

Hansen is criticizing cap-and-trade by pointing to what economists call the “waterbed effect”: if total emissions are fixed by a cap, then individual voluntary reductions (driving a more efficient car, conserving energy) may not lower aggregate national emissions, because unused allowances can be purchased and used by others. The quote argues that this can dampen the moral and motivational force of personal sacrifice—altruistic behavior feels futile if it merely frees room for someone else’s higher emissions. Implicitly, Hansen is urging policies that directly reduce the cap over time or that price carbon in a way that makes aggregate emissions fall with widespread behavioral change.