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The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation

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Listed:
  • Chan, Gabriel

    (Harvard University)

  • Stavins, Robert

    (Harvard University)

  • Stowe, Robert

    (Harvard University)

  • Sweeney, Richard

    (Harvard University)

Abstract

The introduction of the U.S. SO2 allowance-trading program to address the threat of acid rain as part of the Clean Air Act Amendments of 1990 is a landmark event in the history of environmental regulation. The program was a great success by almost all measures. This paper, which draws upon a research workshop and a policy roundtable held at Harvard in May 2011, investigates critically the design, enactment, implementation, performance, and implications of this path-breaking application of economic thinking to environmental regulation. Ironically, cap and trade seems especially well suited to addressing the problem of climate change, in that emitted greenhouse gases are evenly distributed throughout the world's atmosphere. Recent hostility toward cap and trade in debates about U.S. climate legislation may reflect the broader political environment of the climate debate more than the substantive merits of market-based regulation.

Suggested Citation

  • Chan, Gabriel & Stavins, Robert & Stowe, Robert & Sweeney, Richard, 2012. "The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation," Working Paper Series rwp12-003, Harvard University, John F. Kennedy School of Government.
  • Handle: RePEc:ecl:harjfk:rwp12-003
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    References listed on IDEAS

    as
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    Cited by:

    1. Richard Schmalensee & Robert N. Stavins, 2013. "The SO 2 Allowance Trading System: The Ironic History of a Grand Policy Experiment," Journal of Economic Perspectives, American Economic Association, vol. 27(1), pages 103-122, Winter.
    2. Ann Ferris & Ronald J. Shadbegian & Ann Wolverton, 2014. "The Effect of Environmental Regulation on Employment: An Examination of the 1990 Clean Air Act Amendments and its Impact on the Electric Power Sector," NCEE Working Paper Series 201403, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Feb 2014.
    3. Ann E. Ferris & Ronald J. Shadbegian & Ann Wolverton, 2014. "The Effect of Environmental Regulation on Power Sector Employment: Phase I of the Title IV SO2 Trading Program," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(4), pages 521-553.
    4. Jaime de Melo, 2014. "Trade in a “Green Growth” Development Strategy. Issues and Challenges," Revue d’économie du développement, De Boeck Université, vol. 22(HS01), pages 157-184.
    5. Lawrence H. Goulder & Andrew Schein, 2013. "Carbon Taxes vs. Cap and Trade: A Critical Review," NBER Working Papers 19338, National Bureau of Economic Research, Inc.
    6. repec:eee:enepol:v:107:y:2017:i:c:p:210-224 is not listed on IDEAS

    More about this item

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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