Developments relevant to the sinking lid strategy

There appear to be no further developments in advancing sinking lid-type strategies in the USA since Senator Michael Enzi proposed the ‘Help End Addiction to Lethal Tobacco Habits Act’ in 2007.7 However, in New Zealand, the sinking lid approach was recommended for further consideration by a Select Committee of Parliament, which had performed an inquiry into the tobacco industry in 2010.8 Nevertheless, progressing this approach has not been substantially picked up in the New Zealand Government's official response,9 and its subsequent tobacco control activities have been more focused on introducing multiyear series of annual tobacco tax increases. Although this country has announced a goal for a ‘Smokefree Nation by 2025’, there is still a marked lack of detail around definitions, plans and processes.10 ,11

International experience with running various quota systems, often with large corporate players involved, provides some evidence that governments can run these successfully, and that they can have the desired impact. One example of a successful auction system is for sulphur dioxide emission ‘allowances’, and this system has been functioning in the USA since 1995 (it is currently run by the Environmental Protection Agency).12 Such an approach has been expanded to nitrogen oxides, and there is a grouping of 27 eastern US states which are part of a cap-and-trade system that is designed to reduce emissions of the target pollutants (sulphur dioxide and nitrogen oxides) by 70%.13 Reviews of this US experience are favourable,14 ,15 and there is also evidence for greenhouse gas emission reductions from the ‘Regional Greenhouse Gas Initiative’ in the USA.15 Perhaps because of this experience in the USA, some public health experts have recently advocated for a cap-and-trade system for controlling the excessive nutrients in the US food system (salt, sugar and unhealthy fats).16

By contrast with the US experience above, the international experience with quota systems and emissions trading systems for carbon appears more mixed. For example, the European Union's Emissions Trading Scheme has not performed as well as expected due to suboptimal design of the scheme (eg, excess distribution of free carbon allowances), and the impact of the global financial crisis on European economic activity.17 Nevertheless, the system has, without doubt, delivered carbon emission reductions, and it has been responsive to energy sector developments (eg, the German nuclear energy phase-down).17 Australia is now following suit, though its newly introduced pricing mechanism for carbon will not evolve into a cap-and-trade scheme until 2015.18 ,19 China has announced seven emissions trading pilots,20 and there are emerging permit schemes in South Korea and Mexico.19

Even more common, internationally, are quota (or ‘catch share’) systems for fisheries, where total quotas can be reduced if necessary, and can be traded. One review has reported that ‘implementation of catch shares halts, and even reverses, the global trend toward widespread collapse’ of fisheries.21 More recent evidence from North American fisheries also suggests that these systems may generate some shift towards more ecological stewardship22 (ie, more sustainable long-term management). Nevertheless, it has been noted that such systems do not remove all incentives for poor stewardship, and that programme design is critical.22 Furthermore, some modelling work suggests that catch quota control when combined with a ‘large closed area’ to fishing can be the most effective system for maintaining both short and long-term economic performance’.23 In terms of a specific country example, the Organisation for Economic Co-operation and Development (OECD) has praised Iceland for the quality of its tradeable quota system that has helped ensure a sustainable (and profitable) fishery.24

Nevertheless, the examples described above still differ in critical aspects from a sinking lid of quotas on tobacco. Thus, while some societies might be described as suffering ‘fossil fuel addiction’,25 this is not the same as many citizens consuming a physiologically ‘addictive’ product daily (as it is with most smokers). Also these other quota systems do not usually aim for a rapid reduction in supply down to a very low level or with a complete sales end-date (eg, over 10–15 years as might be planned for tobacco).

Advantages of the sinking lid strategy

A likely strength of the sinking lid strategy is that it provides a clear timetable for policymakers and can include an unambiguous signal of the tobacco sales end-date. It is much more difficult to predict a target date for achievement of the endgame (eg, of <1% smoking prevalence) solely using instruments such as ongoing tobacco tax rises. It is highly plausible that a clear timetable to an end-date would increase motivational tension in smokers and associated quitting behaviour (potentially via both planned and unplanned26 quit attempts). Such an approach could also facilitate more focused activity by the health sector around promoting and supporting smoking cessation.

Another likely advantage is that some of the mechanisms involved in the strategy are well understood. That is, the likely consequence of supply reduction, increased price (driven by tobacco tax increases), is a highly evidence-based tobacco control intervention in most countries. There are also the working analogies for how governments manage tradeable quota systems as discussed above. These aspects will provide some reassurance for policymakers concerned with achieving endgame success, and officials concerned with short-revenue streams. Indeed, by maintaining both tobacco taxation for the bulk of the revenue and also introducing revenue from auctioned quotas, a greater proportion of the tobacco price could potentially be shifted from tobacco industry profits into government revenue (especially if there was also a maximum pretax price that retailers and manufacturers could charge).27 In some jurisdictions, this could provide additional total revenue in the short term (for other tobacco control interventions or for health sector funding), until smoking prevalence falls appreciably, and then total revenue from this source declines. As with all tobacco endgame strategies, if governments wish to maintain constant revenue streams, then other types of taxes may need to be raised (eg, on pollutants such as carbon) as tobacco tax revenues start to decline.

As per most other endgame strategies in this supplement, this strategy is likely to be highly compatible with a wide suite of adjunct evidence-based tobacco control interventions (eg, expanded smokefree area laws, mass media campaigns, quitlines and other smoking cessation support). Indeed, for equity reasons (given that smokers are more likely to be people on relatively low incomes), it is optimal that strong adjunct interventions are part of a package so that demand is reduced in such a way that price does not become exorbitant in the short to medium term.

The sinking lid strategy would also be compatible with some other endgame strategies, such as a smoker's licence system6 (though for reasons of practicality, cost and political acceptability, this is perhaps best introduced at very low smoking prevalences). It could also be complemented with the strategy of phasing-down nicotine levels in all cigarettes on the market28 and of differential phase-outs for different types of tobacco products (depending on existing country-specific tobacco markets and views on harm reduction).

But there are trade-offs in terms of developing a strong and comprehensive endgame package versus a more simple approach that minimises demands on limited political capital and organisational capacity. Therefore, it may be more appropriate for small jurisdictions to run only with the sinking lid strategy, and accompany it with only traditional demand reduction interventions (smoking cessation support, etc).

Disadvantages of the sinking lid strategy

Possible next steps for further research and policy

For the reasons given above, we acknowledge that the sinking lid strategy might ultimately be only an endgame strategy suited for well-organised jurisdictions with other favourable features, such as: relatively low smoking prevalence in adults (eg, under 15%), and the other features referred to above (eg, minimal corruption).29 Nevertheless, settings using this strategy could achieve major population health gain, compared with the status quo in most countries of small incremental steps to gradually reduce smoking prevalence. Furthermore, we suspect that the world will probably need a range of different tobacco endgame strategies to cope with diverse country settings. Some of the research options that may advance understanding of a sinking lid strategy are as follows.