IDEAS home Printed from https://ideas.repec.org/a/kap/regeco/v30y2006i2p179-198.html
   My bibliography  Save this article

Factors that determine the cost-effectiveness ranking of second-best instruments for environmental regulation

Author

Listed:
  • Raúl O’Ryan

Abstract

This paper develops a conceptual model to analyze how specific factors affect the compliance costs of three suboptimal policy instruments, when compared to the optimal ambient permit system (APS) benchmark. The model considers a non-uniformly mixed pollutant and explicitly incorporates the following factors: number of polluting sources; size, in terms of emissions, of each process; marginal abatement costs for each process; effluent concentrations; the transfer coefficient that relates emissions to environmental quality at the receptor; and the desired environmental quality target. APS is compared to a suboptimal emission permit system (EPS), and two Command and Control (CAC) policies—equal percentage reduction (PER) and a uniform effluent concentration standard (STD). The results show the importance of the different factors and their interactions in determining each policy instrument’s cost-effectiveness ranking. Surprisingly, EPS performs well within the usual values of these factors and in specific cases STD and PER also perform similarly to APS. Copyright Springer Science+Business Media, LLC 2006

Suggested Citation

  • Raúl O’Ryan, 2006. "Factors that determine the cost-effectiveness ranking of second-best instruments for environmental regulation," Journal of Regulatory Economics, Springer, vol. 30(2), pages 179-198, August.
  • Handle: RePEc:kap:regeco:v:30:y:2006:i:2:p:179-198
    DOI: 10.1007/s11149-006-0014-5
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1007/s11149-006-0014-5
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1007/s11149-006-0014-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. O'Ryan, Raúl & Miller, Sebastian & de Miguel, Carlos J., 2003. "A CGE framework to evaluate policy options for reducing air pollution emissions in Chile," Environment and Development Economics, Cambridge University Press, vol. 8(2), pages 285-309, May.
    2. Bohm, Peter & Russell, Clifford S., 1985. "Comparative analysis of alternative policy instruments," Handbook of Natural Resource and Energy Economics, in: A. V. Kneese† & J. L. Sweeney (ed.), Handbook of Natural Resource and Energy Economics, edition 1, volume 1, chapter 10, pages 395-460, Elsevier.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mardones, Cristian & Saavedra, Andrés, 2016. "Comparison of economic instruments to reduce PM2.5 from industrial and residential sources," Energy Policy, Elsevier, vol. 98(C), pages 443-452.
    2. François Destandau & Youssef Zaiter, 2022. "Cost-benefit analysis of nitrate abatement in the Souffel catchment (France): Sensitivity study of the damage and spatialization of the abatement effort," Post-Print hal-03658461, HAL.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Don Fullerton & Gilbert E. Metcalf, 2002. "Environmental Controls, Scarcity Rents, and Pre-existing Distortions," Chapters, in: Lawrence H. Goulder (ed.), Environmental Policy Making in Economies with Prior Tax Distortions, chapter 26, pages 504-522, Edward Elgar Publishing.
    2. Alberto Gago & Xavier Labandeira & Xiral López Otero, 2014. "A Panorama on Energy Taxes and Green Tax Reforms," Hacienda Pública Española / Review of Public Economics, IEF, vol. 208(1), pages 145-190, March.
    3. Bonacina, Monica & Gulli`, Francesco, 2007. "Electricity pricing under "carbon emissions trading": A dominant firm with competitive fringe model," Energy Policy, Elsevier, vol. 35(8), pages 4200-4220, August.
    4. Marcelo Caffera & Juan Dubra, 2005. "Getting Polluters to Tell the Truth," Microeconomics 0504008, University Library of Munich, Germany.
    5. Petrick, Martin, 2004. "Governing Structural Change And Externalities In Agriculture: Toward A Normative Institutional Economics Of Rural Development," IAMO Discussion Papers 14878, Institute of Agricultural Development in Transition Economies (IAMO).
    6. Arguedas, Carmen & Rousseau, Sandra, 2009. "A note on the complementarity of uniform emission standards and monitoring strategies," Working Papers 2009/12, Hogeschool-Universiteit Brussel, Faculteit Economie en Management.
    7. Verbruggen, Aviel, 2009. "Performance evaluation of renewable energy support policies, applied on Flanders' tradable certificates system," Energy Policy, Elsevier, vol. 37(4), pages 1385-1394, April.
    8. Mathieu-Bolh, Nathalie, 2017. "Can tax reforms help achieve sustainable development?," Resource and Energy Economics, Elsevier, vol. 50(C), pages 135-163.
    9. Dovers, Stephen R., 1995. "A framework for scaling and framing policy problems in sustainability," Ecological Economics, Elsevier, vol. 12(2), pages 93-106, February.
    10. Botor, Benjamin & Böcker, Benjamin & Kallabis, Thomas & Weber, Christoph, 2021. "Information shocks and profitability risks for power plant investments – impacts of policy instruments," Energy Economics, Elsevier, vol. 102(C).
    11. Gerard, David, 2000. "The law and economics of reclamation bonds," Resources Policy, Elsevier, vol. 26(4), pages 189-197, December.
    12. Ribaudo, Marc & Greene, Catherine & Hansen, LeRoy & Hellerstein, Daniel, 2010. "Ecosystem services from agriculture: Steps for expanding markets," Ecological Economics, Elsevier, vol. 69(11), pages 2085-2092, September.
    13. Young, Michael D., 1997. "Water Rights: An Ecological .Economics Perspective," 1997 Conference (41st), January 22-24, 1997, Gold Coast, Australia 135416, Australian Agricultural and Resource Economics Society.
    14. Clifford S. Russell & Philip T. Powell, 1996. "Choosing Environmental Policy Tools: Theoretical Cautions and Practical Considerations," IDB Publications (Working Papers) 25258, Inter-American Development Bank.
    15. McSweeny, William T. & Shortle, James S., 1989. "Reducing Nutrient Application Rates For Water Quality Protection In Intensive Livestock Areas: Policy Implications Of Alternative Producer Behavior," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 18(1), pages 1-11, April.
    16. Caffera, Marcelo & Dubra, Juan & Figueroa, Nicolás, 2018. "Mechanism design when players’ preferences and information coincide," Mathematical Social Sciences, Elsevier, vol. 91(C), pages 56-61.
    17. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
    18. O’RYAN Raul & DE MIGUEL Carlos & MILLER Sebastián & MUNASINGHE Mohan, 2010. "General Equilibrium Analysis of Cross Effects in Social and Environmental Policies: Case Study of Chile," EcoMod2003 330700114, EcoMod.
    19. Dietz, F.J. & van der Straaten, J., 1993. "Conflicting interests and property rights in environmental issues," WORC Paper 93.10.035/2A, Tilburg University, Work and Organization Research Centre.
    20. Sterner, Thomas & Hoglund, Lena, 2000. "Output-Based Refunding of Emission Payments: Theory, Distribution of Costs, and International Experience," Discussion Papers 10670, Resources for the Future.

    More about this item

    Keywords

    Environmental regulation; Policy instrument choice; Cost-effectiveness; Environmental economics; Tradable permits; Command and control; Q58; Q50;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:regeco:v:30:y:2006:i:2:p:179-198. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.