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Tradable Permits in Developing Countries: Evidence from Air Pollution in Santiago, Chile

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  • Coria, Jessica
  • Sterner, Thomas

Abstract

Santiago was one of the first cities outside the OECD to implement a tradable permit program to control air pollution. This paper looks closely at the program’s performance over the past ten years, stressing its similarities and discrepancies with trading programs implemented in developed countries, and analyzing how it has reacted to regulatory adjustments and market shocks. Studying Santiago’s experience allows us to discuss the drawbacks and advantages of applying tradable permits in less developed countries.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-08-51.

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Date of creation: 18 Dec 2008
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Handle: RePEc:rff:dpaper:dp-08-51

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Related research

Keywords: air pollution; environmental policy; tradable permits; developing countries;

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References

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  1. Afsah, Shakeb & Sterner, Thomas & López, Jorge, 2004. "Public Disclosure of Industrial Pollution: The PROPER Approach for Indonesia?," Discussion Papers dp-04-34, Resources For the Future.
  2. Montero, Juan-Pablo & Sanchez, Jose Miguel & Katz, Ricardo, 2002. "A Market-Based Environmental Policy Experiment in Chile," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 267-87, April.
  3. Catherine Boemare & Philippe Quirion, 2002. "Implementing greenhouse gas trading in Europe: lessons from economic literature and international experiences," Post-Print halshs-00007264, HAL.
  4. Jessica Coria, 2007. "Environmental policy, fuel prices and the switching to natural gas in Santiago, Chile," Working Papers 200701, Latin American and Caribbean Environmental Economics Program, revised Jun 2007.
  5. Richard Schmalensee & Paul L. Joskow & A. Denny Ellerman & Juan Pablo Montero & Elizabeth M. Bailey, 1998. "An Interim Evaluation of Sulfur Dioxide Emissions Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 53-68, Summer.
  6. Sterner, Thomas & Muller, Adrian, 2006. "Output and Abatement Effects of Allocation Readjustment in Permit Trade," Discussion Papers dp-06-49, Resources For the Future.
  7. Burtraw, Dallas & Krupnick, Alan & Austin, David & Farrell, Deirdre & Mansur, Erin, 1997. "The Costs and Benefits of Reducing Acid Rain," Discussion Papers dp-97-31-rev, Resources For the Future.
  8. Palacios, Milagros & Ch Vez, Carlos, 2005. "Determinants of compliance in the emissions compensation program in Santiago, Chile," Environment and Development Economics, Cambridge University Press, vol. 10(04), pages 453-483, August.
  9. Tomasz Żylicz, 1995. "Cost-effectiveness of air pollution abatement in Poland," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 5(2), pages 131-149, March.
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  11. Farrow, Scott, 1999. "The duality of taxes and tradable permits: A survey with applications in Central and Eastern Europe," Environment and Development Economics, Cambridge University Press, vol. 4(04), pages 519-535, October.
  12. Solomon, Barry D., 1999. "New directions in emissions trading: the potential contribution of new institutional economics," Ecological Economics, Elsevier, vol. 30(3), pages 371-387, September.
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  15. Burtraw, Dallas & Palmer, Karen, 2003. "The Paparazzi Take a Look at a Living Legend: The SO2 Cap-and-Trade Program for Power Plants in the United States," Discussion Papers dp-03-15, Resources For the Future.
  16. Hahn, Robert W, 1989. "Economic Prescriptions for Environmental Problems: How the Patient Followed the Doctor's Orders," Journal of Economic Perspectives, American Economic Association, vol. 3(2), pages 95-114, Spring.
  17. Leonard Shabman & Kurt Stephenson & William Shobe, 2002. "Trading Programs for Environmental Management: Reflections on the Air and Water Experiences," Working Papers 2002-01, Center for Economic and Policy Studies.
  18. Blackman, Allen & Harrington, Winston, 1999. "The Use of Economic Incentives in Developing Countries: Lessons from International Experience with Industrial Air Pollution," Discussion Papers dp-99-39, Resources For the Future.
  19. Enrique Calfucura & Jessica Coria & José Miguel Sánchez, 2008. "Permisos Transables de Emisión en Chile: Lecciones, Desafíos y Oportunidades para Países en Desarrollo," Documentos de Trabajo 347, Instituto de Economia. Pontificia Universidad Católica de Chile..
  20. Robert N. Stavins, 1998. "What Can We Learn from the Grand Policy Experiment? Lessons from SO2 Allowance Trading," Journal of Economic Perspectives, American Economic Association, vol. 12(3), pages 69-88, Summer.
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  25. Calfucura, Enrique & Coria, Jessica & Sánchez, José Miguel, 2009. "Permisos comerciables de emisión en Chile. Lecciones, desafíos y oportunidades para países en desarrollo," El Trimestre Económico, Fondo de Cultura Económica, vol. 0(304), pages 1027-1069, octubre-d.
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Citations

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Cited by:
  1. Oskar Lecuyer & Philippe Quirion, 2012. "Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions?," Working Papers 2012.91, Fondazione Eni Enrico Mattei.
  2. Caffera, Marcelo, 2011. "The use of economic instruments for pollution control in Latin America: lessons for future policy design," Environment and Development Economics, Cambridge University Press, vol. 16(03), pages 247-273, June.
  3. Oskar Lecuyer & Philippe Quirion, 2012. "Can Uncertainty Justify Overlapping Policy Instruments to Mitigate Emissions ?," Working Papers hal-00866440, HAL.
  4. Coria, Jessica & Löfgren, Åsa & Sterner, Thomas, 2009. "To Trade or Not to Trade: Firm-Level Analysis of Emissions Trading in Santiago, Chile," Discussion Papers dp-09-25-efd, Resources For the Future.
  5. Jessica Coria, 2007. "Environmental policy, fuel prices and the switching to natural gas in Santiago, Chile," Working Papers 200701, Latin American and Caribbean Environmental Economics Program, revised Jun 2007.
  6. Coria, Jessica & Villegas-Palacio, Clara, 2010. "Targeted Enforcement and Aggregate Emissions With Uniform Emission Taxes," Working Papers in Economics 455, University of Gothenburg, Department of Economics.
  7. Escobar, Ninel & Chávez, Carlos, 2013. "Monitoring, firms’ compliance and imposition of fines: evidence from the Federal Industrial Inspection Program in Mexico City," Environment and Development Economics, Cambridge University Press, vol. 18(06), pages 723-748, December.
  8. Coria, Jessica & Villegas-Palacio, Clara & Cárdenas, J.C., 2012. "Why Do Environmental Taxes Work Better in Developed Countries?," Working Papers in Economics 521, University of Gothenburg, Department of Economics.
  9. Coria, Jessica & Villegas-Palacio, Clara & Cárdenas, Juan Camilo, 2011. "Should we tax or let firms trade emissons? An experimental analysis with policy implications for developing countries," Working Papers in Economics 516, University of Gothenburg, Department of Economics.

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