What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program
University of Michigan at Ann Arbor - Gerald R. Ford School of Public Policy; National Bureau of Economic Research (NBER)
Stephen P. Holland
University of California, Berkeley - Energy Institute; University of North Carolina (UNC) at Greensboro - Bryan School of Business & Economics
Erin T. Mansur
Tuck School of Business at Dartmouth; National Bureau of Economic Research (NBER)
June 9, 2009
A perceived advantage of cap-and-trade programs over more prescriptive environmental regulation is that enhanced compliance flexibility and cost effectiveness can make more stringent emissions reductions politically feasible. However, increased compliance flexibility can also result in an inequitable distribution of pollution. We investigate these issues in the context of Southern California's RECLAIM program. We match facilities in RECLAIM with similar California facilities also located in non-attainment areas. Our results indicate that emissions fell approximately 24 percent, on average, at RECLAIM facilities relative to our counterfactual. Furthermore, we find that observed changes in emissions do not vary significantly with neighborhood demographic characteristics.
Number of Pages in PDF File: 61
Keywords: environmental regulation, market based instruments, RECLAIM, environmental justice
JEL Classification: H23, Q52, D63, R20
Date posted: June 11, 2009 ; Last revised: February 21, 2014
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