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Emissions standards and ambient environmental quality standards with stochastic environmental services

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  • Hamilton, Stephen F.
  • Requate, Till

Abstract

Many important environmental policies involve some combination of emission controls and ambient environmental quality standards, for instance SO2 emissions are capped under Title IV of the U.S. Clean Air Act Amendments while ambient SO2 concentrations are limited under National Ambient Air Quality Standards (NAAQS). This paper examines the relative performance of emissions standards and ambient standards when the natural environment provides stochastic environmental services for assimilating pollution. For receiving media characterized by greater dispersion in the distribution of environmental services, the optimal emissions policy becomes more stringent, whereas the optimal ambient policy generally becomes more lax. In terms of economic performance, emissions policies are superior to ambient policies for relatively non-toxic pollutants, whereas ambient standards welfare dominate emissions standards for sufficiently toxic pollutants. In the case of combined policies that jointly implement emissions standards and ambient standards, we show that the optimal level of each standard relaxes relative to its counterpart in a unilateral policy, allowing for greater emissions levels and higher pollution concentrations in the environmental medium.

Suggested Citation

  • Hamilton, Stephen F. & Requate, Till, 2012. "Emissions standards and ambient environmental quality standards with stochastic environmental services," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 377-389.
  • Handle: RePEc:eee:jeeman:v:64:y:2012:i:3:p:377-389
    DOI: 10.1016/j.jeem.2012.05.001
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    Cited by:

    1. Richard T. Carson & Jacob LaRiviere, 2018. "Structural Uncertainty and Pollution Control: Optimal Stringency with Unknown Pollution Sources," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(2), pages 337-355, October.
    2. Ye, Fei & Ouyang, You & Li, Yina, 2023. "Digital investment and environmental performance: The mediating roles of production efficiency and green innovation," International Journal of Production Economics, Elsevier, vol. 259(C).
    3. Alejandro Caparrós & Richard E. Just & David Zilberman, 2015. "Dynamic Relative Standards versus Emission Taxes in a Putty-Clay Model," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 2(2), pages 277-308.
    4. Xiaoyan Wang & Weiwei Zhang, 2022. "Taxes Versus Tradable Permits Considering Public Environmental Awareness," Economics of Disasters and Climate Change, Springer, vol. 6(2), pages 293-315, July.

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