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

Author

Listed:
  • Gabriel Chan

    (Harvard Kennedy School)

  • Robert Stavins

    (Harvard Kennedy School)

  • Robert Stowe

    (Harvard Kennedy School)

  • Richard Sweeney

    (Harvard Kennedy School)

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

  • Gabriel Chan & Robert Stavins & Robert Stowe & Richard Sweeney, 2012. "The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation," Working Papers 2012.06, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2012.06
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    References listed on IDEAS

    as
    1. Elaine Frey, 2008. "Technology Diffusion and Environmental Regulation: The Adoption of Scrubbers by Coal-Fired Power Plants," NCEE Working Paper Series 200804, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Mar 2008.
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    Citations

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    Cited by:

    1. 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.
    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. 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.
    5. repec:eee:enepol:v:107:y:2017:i:c:p:210-224 is not listed on IDEAS
    6. 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.

    More about this item

    Keywords

    Cap-and-Trade; Market-Based Environmental Policy; Acid Rain; Sulfur Dioxide; Clean Air Act Amendments;

    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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