The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation

48 Pages Posted: 2 Feb 2012

See all articles by Gabriel Chan

Gabriel Chan

affiliation not provided to SSRN

Robert N. Stavins

Harvard University - Harvard Kennedy School (HKS); Resources for the Future; National Bureau of Economic Research (NBER)

Robert Stowe

affiliation not provided to SSRN

Richard Sweeney

Harvard University

Multiple version iconThere are 2 versions of this paper

Date Written: January 30, 2012

Abstract

The introduction of the U.S. SO2 allowance-trading program to address the threat of acid rain as part of the Clean Air Act Amendments of 1990 is a landmark event in the history of environmental regulation. The program was a great success by almost all measures. This paper, which draws upon a re¬search workshop and a policy roundtable held at Harvard in May 2011, investigates critically the design, enactment, implementation, performance, and implications of this path-breaking application of economic thinking to environmental regulation. Ironically, cap and trade seems especially well suited to addressing the problem of climate change, in that emitted greenhouse gases are evenly distributed throughout the world’s atmosphere. Recent hostility toward cap and trade in debates about U.S. climate legislation may reflect the broader political environment of the climate debate more than the substantive merits of market-based regulation.

Keywords: cap-and-trade, market-based environmental policy, acid rain, sulfur dioxide, Clean Air Act Amendments

JEL Classification: Q520, Q550, Q580

Suggested Citation

Chan, Gabriel and Stavins, Robert N. and Stowe, Robert and Sweeney, Richard, The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation (January 30, 2012). Available at SSRN: https://ssrn.com/abstract=1997310 or http://dx.doi.org/10.2139/ssrn.1997310

Gabriel Chan

affiliation not provided to SSRN ( email )

Robert N. Stavins (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
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Resources for the Future

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National Bureau of Economic Research (NBER) ( email )

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Robert Stowe

affiliation not provided to SSRN ( email )

Richard Sweeney

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

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