Do Environmental Markets Cause Environmental Injustice? Evidence from California's Carbon Market

33 Pages Posted: 26 May 2020

See all articles by Danae Hernandez-Cortes

Danae Hernandez-Cortes

affiliation not provided to SSRN

Kyle Meng

University of California, Santa Barbara (UCSB) - Donald Bren School of Environmental Science & Management

Date Written: May 2020

Abstract

Market-based environmental policies are widely adopted on the basis of allocative efficiency. However, there is a growing distributional concern that market forces could increase the pollution exposure gap between disadvantaged and other communities by spatially reallocating pollution. We estimate how this “environmental justice gap” changed following the 2013 introduction of California’s carbon market, the world’s second largest and the one most subjected to environmental justice critiques. Embedding a pollution transport model within a program evaluation framework, we find that while the EJ gap was widening prior to 2013, it has since fallen by 21-30% across pollutants due to the policy.

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Suggested Citation

Hernandez-Cortes, Danae and Meng, Kyle, Do Environmental Markets Cause Environmental Injustice? Evidence from California's Carbon Market (May 2020). NBER Working Paper No. w27205, Available at SSRN: https://ssrn.com/abstract=3609657

Danae Hernandez-Cortes (Contact Author)

affiliation not provided to SSRN

No Address Available

Kyle Meng

University of California, Santa Barbara (UCSB) - Donald Bren School of Environmental Science & Management ( email )

4670 Physical Sciences North
Santa Barbara, CA 93106-5131
United States

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