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Controlling Urban Air Pollution Caused by Households: Uncertainty, Prices, and Income

Author

Listed:
  • Carlos A. Chavez

    () (Departamento de Economia, Universidad de Concepcion Chile)

  • John K. Stranlund

    () (Department of Resource Economics, University of Massachusetts Amherst)

  • Walter Gomez

    () (Departamento de Ingenieria Matematica, Universidad de la Frontera Chile)

Abstract

We examine the control of air pollution caused by households burning wood for heating and cooking in the developing world. Since the problem is one of controlling emissions from nonpoint sources, regulations are likely to be directed at household choices of wood consumption and combustion technologies. Moreover, these choices are subtractions from, or contributions to, the pure public good of air quality. Consequently, the efficient policy design is not independent of the distribution of household income. Since it is unrealistic to assume that environmental authorities can make lump sum income transfers part of control policies, efficient control of air pollution caused by wood consumption entails a higher tax on wood consumption and a higher subsidy for more efficient combustion technologies for higher income households. Among other difficulties, implementing a policy to promote the adoption of cleaner combustion technologies must overcome the seemingly paradoxical result that efficient control calls for higher technology subsidies for higher income households.

Suggested Citation

  • Carlos A. Chavez & John K. Stranlund & Walter Gomez, 2010. "Controlling Urban Air Pollution Caused by Households: Uncertainty, Prices, and Income," Working Papers 2010-2, University of Massachusetts Amherst, Department of Resource Economics.
  • Handle: RePEc:dre:wpaper:2010-2
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    Keywords

    efficiency; urban air pollution; nonpoint pollution; environmental policy; uncertainty;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy

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