Efficiency gains from integrated multipollutant trading
| Autor: | Carson Reeling, Richard D. Horan, Cloé Garnache |
|---|---|
| Rok vydání: | 2018 |
| Předmět: |
Pollutant
Economics and Econometrics media_common.quotation_subject 05 social sciences Environmental media Environmental economics Outcome (game theory) Harm 0502 economics and business Production (economics) Quality (business) 050202 agricultural economics & policy Business 050207 economics Instrument design Environmental quality media_common |
| Zdroj: | Resource and Energy Economics. 52:124-136 |
| ISSN: | 0928-7655 |
| Popis: | Interest in expanding market-based approaches involving intra-pollutant trading (trading “like” pollutants) to allow inter-pollutant trading (trading “dis-similar” pollutants) is growing. Because many pollutants are regulated separately, designing inter-pollutant markets requires considering pre-existing regulatory constraints. We examine the optimal choices of inter- and intra-pollutant trade ratios when (i) some firms generate multiple pollutants affecting different media and (ii) permit caps are sub-optimal, having been exogenously specified by prior regulations. While the first-best outcome is unobtainable in this setting, we find inter-pollutant trading enhances efficiency by offering an additional policy instrument: the inter-pollutant trade ratio. Moreover, adjustments to intra-pollutant trade ratios reflecting the joint production of dis-similar pollutants can enhance efficiency. We also find realistic cases where inter-pollutant trading may universally improve environmental quality, easing concerns that trading across environmental media may harm one medium. An example of nitrogen trading in Pennsylvania’s Susquehanna River Basin illustrates our results. |
| Databáze: | OpenAIRE |
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