Tradable Rights to Emit Air Pollution

26 Pages Posted: 2 Jan 2009

See all articles by Dallas Burtraw

Dallas Burtraw

Resources for the Future

David A. Evans

U.S. Environmental Protection Agency (EPA) - National Center for Environmental Economics

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Abstract

The use of cap-and-trade to regulate air pollution promises to achieve environmental goals at lower cost than traditional prescriptive approaches. Cap-and-trade has been applied to various air pollutants including sulphur dioxide, nitrogen oxides and volatile organic compounds in the United States and carbon dioxide (CO) in the European Union. This corresponds to what is likely to become the most expensive environmental undertaking in history the effort to reduce the heating of the planet. However, the efficacy of a cap-and-trade policy for CO depends in large part on the design of the program. In addition to the level of the cap, the most important decision facing policymakers will be the initial allocation of emissions allowances. The method used to allocate tradable emissions allowances will have significant influence on the distributional impact and efficiency of the program.

Suggested Citation

Burtraw, Dallas and Evans, David A., Tradable Rights to Emit Air Pollution. Australian Journal of Agricultural and Resource Economics, Vol. 53, No. 1, pp. 59-84, January 2009, Available at SSRN: https://ssrn.com/abstract=1319989 or http://dx.doi.org/10.1111/j.1467-8489.2007.00428.x

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Resources for the Future ( email )

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David A. Evans

U.S. Environmental Protection Agency (EPA) - National Center for Environmental Economics ( email )

Washington, DC 20460
United States

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