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The impact of trading on the costs and benefits of the Acid Rain Program

Author

Listed:
  • Chan, H. Ron
  • Chupp, B. Andrew
  • Cropper, Maureen L.
  • Muller, Nicholas Z.

Abstract

We quantify the cost savings from the Acid Rain Program (ARP) by comparing compliance costs for 761 coal-fired generating units under the ARP with compliance costs under a counterfactual uniform performance standard (UPS) that would have achieved the same aggregate emissions in 2002. In 2002, we find compliance costs to be $200 million (1995$) lower and health damages to be $170 million (1995$) lower under the ARP. We also compare health damages associated with observed SO2 emissions from all ARP units in 2002 with damages from a no-trade counterfactual. Damages under the ARP are $2.1 billion (1995$) higher than under the no-trade scenario, reflecting allowance transfers from units in the western US to units in the eastern US with larger exposed populations.

Suggested Citation

  • Chan, H. Ron & Chupp, B. Andrew & Cropper, Maureen L. & Muller, Nicholas Z., 2018. "The impact of trading on the costs and benefits of the Acid Rain Program," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 180-209.
  • Handle: RePEc:eee:jeeman:v:88:y:2018:i:c:p:180-209
    DOI: 10.1016/j.jeem.2017.11.004
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    Cited by:

    1. repec:eee:rensus:v:106:y:2019:i:c:p:79-96 is not listed on IDEAS
    2. Richard Schmalensee & Robert N. Stavins, 2018. "Policy Evolution under the Clean Air Act," NBER Working Papers 25309, National Bureau of Economic Research, Inc.
    3. Edward Schlee & V. Kerry Smith, 2016. "The Welfare Cost of Uncertainty in Policy Outcomes," NBER Working Papers 22864, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Q51; Q52; Q58; Sulfur dioxide; Acid rain; Performance standards; Health effects; Pollution permits; Cap and trade;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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