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What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program

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  • Meredith Fowlie
  • Stephen P. Holland
  • Erin T. Mansur

Abstract

An advantage of cap-and-trade programs over more prescriptive environmental regulation is that compliance flexibility and cost effectiveness can make more stringent emissions reductions politically feasible. However, when markets (versus regulators) determine where emissions occur, it becomes more difficult to assure that mandated emissions reductions are equitably achieved. We investigate these issues in the context of Southern California's RECLAIM program by matching facilities in RECLAIM with similar California facilities also in nonattainment areas. Our results indicate that average emissions fell 20 percent at RECLAIM facilities relative to our counterfactual. Furthermore, observed changes in emissions do not vary significantly with neighborhood demographic characteristics. (JEL H23, L51, Q53, Q58)

Suggested Citation

  • Meredith Fowlie & Stephen P. Holland & Erin T. Mansur, 2012. "What Do Emissions Markets Deliver and to Whom? Evidence from Southern California's NOx Trading Program," American Economic Review, American Economic Association, vol. 102(2), pages 965-993, April.
  • Handle: RePEc:aea:aecrev:v:102:y:2012:i:2:p:965-93
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    More about this item

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General

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