IDEAS home Printed from https://ideas.repec.org/a/ags/aareaj/118527.html
   My bibliography  Save this article

Modelling a mixed system of air pollution fee and tradable permits for controlling nitrogen oxide: a case study of Taiwan

Author

Listed:
  • Liao, Chao-Ning

Abstract

A mixed-integer non-linear programming model that minimises the total regulatory costs of controlling nitrogen oxide is used to investigate how a newly proposed permit trading scheme in Taiwan, which incorporates the features of banking and a nonone- to-one trading ratio, may affect firms’ emission reduction strategies and permit trading decisions. Compared to the previous regulation where only an air pollution fee is used, the new regulation that requires a reduction in emissions by 10 per cent from the emission level in the year 2000 for a 5 year period will increase the costs by 77 per cent, which is equivalent to US 9.87 million. The design of banking and the increasing returns to scale characteristic of pollution control among firms might lead to an uneven reduction in emissions in each year. Setting a lower reservation rate for banking would, however, help maintain a more stable environmental quality without a significant loss to the government in terms of air pollution fee revenue.

Suggested Citation

  • Liao, Chao-Ning, 2007. "Modelling a mixed system of air pollution fee and tradable permits for controlling nitrogen oxide: a case study of Taiwan," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 51(4), pages 1-16.
    • Handle: RePEc:ags:aareaj:118527
    DOI: 10.22004/ag.econ.118527
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/118527/files/j.1467-8489.2007.00400.x.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.118527?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
    ---><---

    References listed on IDEAS

    as
    1. Greenberg, M.R. & Hollander, J., 2006. "The Environmental Protection Agency's brownfields pilot program," American Journal of Public Health, American Public Health Association, vol. 96(2), pages 277-281.
    2. Rubin, Jonathan D., 1996. "A Model of Intertemporal Emission Trading, Banking, and Borrowing," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 269-286, November.
    3. Tom Tietenberg, 1995. "Tradeable permits for pollution control when emission location matters: What have we learned?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(2), pages 95-113, March.
    4. Krupnick, Alan J. & Oates, Wallace E. & Van De Verg, Eric, 1983. "On marketable air-pollution permits: The case for a system of pollution offsets," Journal of Environmental Economics and Management, Elsevier, vol. 10(3), pages 233-247, September.
    5. Krupnick, Alan & McConnell, Virginia & Stoessell, Terrell & Cannon, Matthew & Batz, Michael, 2000. "Cost-Effective NOx Control in the Eastern United States," RFF Working Paper Series dp-00-18, Resources for the Future.
    6. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
    7. Hagem, Cathrine & Westskog, Hege, 1998. "The Design of a Dynamic Tradeable Quota System under Market Imperfections," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 89-107, July.
    8. Paul Leiby & Jonathan Rubin, 2001. "Intertemporal Permit Trading for the Control of Greenhouse Gas Emissions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(3), pages 229-256, July.
    9. Ferrell, Shannon L. & Williams, Joseph E. & Stoecker, Arthur L., 2002. "Potential Economic Impacts Of The Revised Environmental Protection Agency "Cafo Rule"," 2002 Annual Meeting, July 28-31, 2002, Long Beach, California 36676, Western Agricultural Economics Association.
    10. McGartland, Albert M. & Oates, Wallace E., 1985. "Marketable permits for the prevention of environmental deterioration," Journal of Environmental Economics and Management, Elsevier, vol. 12(3), pages 207-228, September.
    11. Cronshaw, Mark B & Brown-Kruse, Jamie, 1996. "Regulated Firms in Pollution Permit Markets with Banking," Journal of Regulatory Economics, Springer, vol. 9(2), pages 179-189, March.
    12. Ger Klaassen & Finn Førsund & Markus Amann, 1994. "Emission trading in Europe with an exchange rate," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(4), pages 305-330, August.
    13. Y. Ermoliev & M. Michalevich & A. Nentjes, 2000. "Markets for Tradeable Emission and Ambient Permits: A Dynamic Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(1), pages 39-56, January.
    14. Krupnick, Alan J., 1986. "Costs of alternative policies for the control of nitrogen dioxide in Baltimore," Journal of Environmental Economics and Management, Elsevier, vol. 13(2), pages 189-197, June.
    15. Daniel Phaneuf & Till Requate, 2002. "Incentives for Investment in Advanced Pollution Abatement Technology in Emission Permit Markets with Banking," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 22(3), pages 369-390, July.
    16. Maloney, Michael T. & Yandle, Bruce, 1984. "Estimation of the cost of air pollution control regulation," Journal of Environmental Economics and Management, Elsevier, vol. 11(3), pages 244-263, September.
    17. Atkinson, Scott E. & Lewis, Donald H., 1974. "A cost-effectiveness analysis of alternative air quality control strategies," Journal of Environmental Economics and Management, Elsevier, vol. 1(3), pages 237-250, November.
    18. Scott Lee Johnson & David M. Pekelney, 1996. "Economic Assessment of the Regional Clean Air Incentives Market: A New Emissions Trading Program for Los Angeles," Land Economics, University of Wisconsin Press, vol. 72(3), pages 277-297.
    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. Qi, Xiaoyuan & Han, Ying, 2023. "Research on the evolutionary strategy of carbon market under “dual carbon” goal: From the perspective of dynamic quota allocation," Energy, Elsevier, vol. 274(C).

    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. Chao-Ning Liao, 2009. "Technology adoption decisions under a mixed regulatory system of tradable permits and air pollution fees for the control of Total Suspended Particulates in Taiwan," Journal of Regulatory Economics, Springer, vol. 35(2), pages 135-153, April.
    2. Simon Quemin & Christian Perthuis, 2019. "Transitional Restricted Linkage Between Emissions Trading Schemes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(1), pages 1-32, September.
    3. Hung, Ming-Feng & Shaw, Daigee, 2005. "A trading-ratio system for trading water pollution discharge permits," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 83-102, January.
    4. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    5. Richard Newell & William Pizer & Jiangfeng Zhang, 2005. "Managing Permit Markets to Stabilize Prices," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 133-157, June.
    6. Estelle Cantillon & Aurélie Slechten, 2023. "Market Design for the Environment," NBER Chapters, in: New Directions in Market Design, National Bureau of Economic Research, Inc.
    7. Akira Maeda, 2004. "Impact of banking and forward contracts on tradable permit markets," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 6(2), pages 81-102, June.
    8. Harrison Fell & Richard Morgenstern, 2010. "Alternative Approaches to Cost Containment in a Cap-and-Trade System," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 47(2), pages 275-297, October.
    9. Marc Germain & Vincent Van Steenberghe & Alphonse Magnus, 2004. "Optimal Policy with Tradable and Bankable Pollution Permits: Taking the Market Microstructure into Account," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 6(5), pages 737-757, December.
    10. Lehmann, Paul, 2008. "Using a policy mix for pollution control: A review of economic literature," UFZ Discussion Papers 4/2008, Helmholtz Centre for Environmental Research (UFZ), Division of Social Sciences (ÖKUS).
    11. Marie-Laure Breuillé, 2007. "Tradable deficit permits: a way to ensure sub-national fiscal discipline?," Working Papers hal-04139221, HAL.
    12. Newell, Richard G & Stavins, Robert N, 2003. "Cost Heterogeneity and the Potential Savings from Market-Based Policies," Journal of Regulatory Economics, Springer, vol. 23(1), pages 43-59, January.
    13. Akira Maeda, 2004. "Impact of banking and forward contracts on tradable permit markets," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 6(2), pages 81-102, June.
    14. Fell, Harrison & MacKenzie, Ian A. & Pizer, William A., 2012. "Prices versus quantities versus bankable quantities," Resource and Energy Economics, Elsevier, vol. 34(4), pages 607-623.
    15. GERMAIN, Marc & VAN STEENBERGHE, Vincent, 2001. "Optimal policy tradable and bankable pollution permits: taking the market microstructure into account," LIDAM Discussion Papers CORE 2001035, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    16. Jiang, Minxing & Zhu, Bangzhu & Wei, Yi-Ming & Chevallier, Julien & He, Kaijian, 2018. "An intertemporal carbon emissions trading system with cap adjustment and path control," Energy Policy, Elsevier, vol. 122(C), pages 152-161.
    17. Slechten, Aurélie, 2013. "Intertemporal links in cap-and-trade schemes," Journal of Environmental Economics and Management, Elsevier, vol. 66(2), pages 319-336.
    18. Stavins, Robert & Newell, Richard, 2000. "Abatement-Cost Heterogeneity and Anticipated Savings from Market-Based Environmental Policies," Working Paper Series rwp00-006, Harvard University, John F. Kennedy School of Government.
    19. Bosetti, Valentina & Carraro, Carlo & Massetti, Emanuele, 2009. "Banking permits: Economic efficiency and distributional effects," Journal of Policy Modeling, Elsevier, vol. 31(3), pages 382-403, May.
    20. Julien Chevallier & Benoît Sévi, 2014. "On the Stochastic Properties of Carbon Futures Prices," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 58(1), pages 127-153, May.

    More about this item

    Keywords

    Resource /Energy Economics and Policy;

    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:ags:aareaj:118527. 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: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/aaresea.html .

    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.