Do Environmental Markets Cause Environmental Injustice? Evidence from California's Carbon Market

Danae Hernandez-Cortes and Kyle Meng

No 27205, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Market-based environmental policies are widely adopted on the basis of allocative efficiency. However, there is growing concern that market-induced spatial reallocation of pollution could widen existing pollution concentration gaps between disadvantaged and other communities. We examine how this \environmental justice" (EJ) gap changed following the 2013 introduction of California's carbon market, the world's second largest and the most subjected to EJ critiques. We estimate that the program lowered GHG, PM2:5, PM10, and NOx emissions by 3-9% annually between 2012-2017 for sample industrial facilities regulated only by the carbon market. Using a pollution dispersal model to characterize resulting spatial changes in pollution concentrations, we find the program caused EJ gaps in PM2:5, PM10, and NOx from these facilities to narrow by 6-10% annually. We demonstrate that explicit modeling of pollution dispersal is critical for detecting these results.

JEL-codes: H4 I14 Q5 Q51 Q52 Q53 Q54 (search for similar items in EconPapers)
Date: 2020-05
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-reg
Note: EEE EH PE
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Citations: View citations in EconPapers (10)

Published as Danae Hernandez-Cortes & Kyle C. Meng, 2023. "Do environmental markets cause environmental injustice? Evidence from California’s carbon market," Journal of Public Economics, vol 217.

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