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Targeting Green Payments under a Budget Constraint

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Author Info
Richard D. Horan
Roger Claassen
Abstract

Conventional wisdom holds that optimal abatement subsidy rates should be differentiated across firms according to the (actual or imputed) marginal damages created by a firm’s emissions. When subsidy rates are developed under a limited budget, we find they may be optimally differentiated to target, in addition to marginal damages, features such as abatement costs, income transfer, and producer participation. The degree to which subsidy rates optimally target these other features depends on how the subsidy is implemented, or more specifically, on how benchmarks for pollution abatement are defined. The results provide insight into current policy debates.

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File URL: http://le.uwpress.org/cgi/reprint/83/3/319
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Publisher Info
Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 83 (2007)
Issue (Month): 3 ()
Pages: 319-330
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Handle: RePEc:uwp:landec:v:83:y:2007:i:3:p:319-330

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Find related papers by JEL classification:
Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
Q38 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Government Policy (includes OPEC Policy)

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This page was last updated on 2009-12-19.

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