A Simulation Study of Alternative Pollution Control Enforcement Systems

Simulation analysis is used to investigate enforcement of the new source performance standard for particulate matter discharges from coal-fired power plants. The analysis uses engineering and econometric estimates of relevant cost and performance paramenters. Results are generalized by Monte Carlo selection over distributions of each of the appropriate parameter values. The simulations are summarized through regression analysis on the outcomes. Under current legal enforcement it is found that most power plants will violate the standard, that small plants will control to higher removal levels than large plants and that power companies will install relatively costly pollution control technology. Three enforcement alternatives are considered for overcoming these shortcomings: more stringent legal enforcement, enforcement using emission taxes, and a mixed system which uses device certification tests and emission taxes. It is found that each of the alternatives can lead to the standard being met and to more-or-less equal sharing in control burden across plant size. But it is only the two systems which use emission taxes that give incentive for choosing least costly control technology. It is also suggested that emission tax systems are likely to provide stronger incentives toward early compliance. The general applicability of these conclusions to other enforcement situations is discussed.