[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/rff/dpaper/dp-99-25.html
   My bibliography  Save this paper

The Effects of Trading and Banking in the SO2 Allowance Market

Author

Listed:
  • Burtraw, Dallas

    (Resources for the Future)

  • Mansur, Erin
Abstract
The 1990 Clean Air Act Amendments initiated a dramatic reduction in emissions of sulfur dioxide and nitrogen oxides by electric power plants. This paper provides an evaluation of the environmental and public health consequences of the trading and banking provisions of Title IV. A sizable shift in the geographic location of emissions under Title IV (in some states of over 20 percent of emissions after Title IV is implemented) is attributable to trading and/or to banking. There has been considerable concern that this shift in emissions would cause harm to downwind areas due to long-range transport of pollution. The authors find the resulting change in atmospheric concentrations and deposition of pollutants, and the change in monetized health benefits, are most unfavorable in the regions where emissions increase. In the East and Northeast including New York State, an area of particular concern, health benefits increase and deposition of sulfur decreases slightly as a result of trading. In the aggregate, trading results in health related benefits nationally of nearly $570 million in 1995 and about $125 million in 2005. The reason is that the geographic shift in emissions away from more populated areas leads to a decrease in exposure to harmful particulates. Meanwhile, cost savings from trading represent about 13 percent of compliance costs in the No Trading scenario in 1995, and about 37 percent in 2005. Banking has the anticipated effect of changing the timing of emissions. Banking causes a reduction of up to 20 percent in 1995 in some states and a commensurate increase in 2005. The geographic pattern of emission changes as a consequence is varied; some states reduce emissions in 2005 as a result of banking. These changes are small compared to the overall reduction in emissions, sulfur deposition, and human health benefits expected to result from the program.

Suggested Citation

  • Burtraw, Dallas & Mansur, Erin, 1999. "The Effects of Trading and Banking in the SO2 Allowance Market," RFF Working Paper Series dp-99-25, Resources for the Future.
    • Handle: RePEc:rff:dpaper:dp-99-25
    as

    Download full text from publisher

    File URL: http://www.rff.org/RFF/documents/RFF-DP-99-25.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Bohi, Douglas R. & Burtraw, Dallas, 1997. "SO2 Allowance Trading: How Experience and Expectations Measure Up," Discussion Papers 10878, Resources for the Future.
    2. Dallas Burtraw & Alan Krupnick & Erin Mansur & David Austin & Deirdre Farrell, 1998. "Costs And Benefits Of Reducing Air Pollutants Related To Acid Rain," Contemporary Economic Policy, Western Economic Association International, vol. 16(4), pages 379-400, October.
    3. Oates, Wallace E & Portney, Paul R & McGartland, Albert M, 1989. "The Net Benefits of Incentive-Based Regulation: A Case Study of Environmental Standard Setting," American Economic Review, American Economic Association, vol. 79(5), pages 1233-1242, December.
    4. Bohi, Douglas R., 1994. "Utilities and state regulators are failing to take advantage of emission allowance trading," The Electricity Journal, Elsevier, vol. 7(2), pages 20-27, March.
    5. Ellerman, A. Denny & Montero, Juan-Pablo, 1998. "The Declining Trend in Sulfur Dioxide Emissions: Implications for Allowance Prices," Journal of Environmental Economics and Management, Elsevier, vol. 36(1), pages 26-45, July.
    6. Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
    7. Bohi, Douglas R. & Burtraw, Dallas, 1997. "SO2 allowance trading: How do expectations and experience measure up?," The Electricity Journal, Elsevier, vol. 10(7), pages 67-75.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Stowe, Robert C & Stavins, Robert Norman & Chan, Gabriel Angelo & Sweeney, Richard Leonard, 2012. "The SO2 Allowance Trading System and the Clean Air Act Amendments of 1990: Reflections on Twenty Years of Policy Innovation," Scholarly Articles 8160721, Harvard Kennedy School of Government.
    2. Kevin P. Gallagher & Robin Taylor, "undated". "International Trade and Air Pollution: The Economic Costs of Air Emissions from Waterborne Commerce Vessels in the United States," GDAE Working Papers 03-08, GDAE, Tufts University.
    3. Shrimali, Gireesh & Tirumalachetty, Sumala, 2013. "Renewable energy certificate markets in India—A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 26(C), pages 702-716.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Stavins, Robert N., 2003. "Experience with market-based environmental policy instruments," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 1, chapter 9, pages 355-435, Elsevier.
    2. Revesz, Richard & Stavins, Robert, 2004. "Environmental Law and Policy," Working Paper Series rwp04-023, Harvard University, John F. Kennedy School of Government.
    3. Burtraw, Dallas & Palmer, Karen L., 2003. "The Paparazzi Take a Look at a Living Legend: The SO2 Cap-and-Trade Program for Power Plants in the United States," Discussion Papers 10665, Resources for the Future.
    4. Burtraw, Dallas & Szambelan, Sarah Jo, 2009. "U.S. Emissions Trading Markets for SO2 and NOx," RFF Working Paper Series dp-09-40, Resources for the Future.
    5. Burtraw, Dallas & Evans, David A. & Krupnick, Alan J. & Palmer, Karen L. & Toth, Russell, 2005. "Economics of Pollution Trading for SO2 and NOx," Discussion Papers 10488, Resources for the Future.
    6. Stavins, Robert, 2003. "Market-Based Environmental Policies: What Can We Learn from U.S. Experience and Related Research?," Working Paper Series rwp03-031, Harvard University, John F. Kennedy School of Government.
    7. Burtraw, Dallas, 2000. "Innovation Under the Tradable Sulfur Dioxide Emission Permits Program in the U.S. Electricity Sector," RFF Working Paper Series dp-00-38, Resources for the Future.
    8. Stavins, Robert, 2001. "Lessons From the American Experiment With Market-Based Environmental Policies," RFF Working Paper Series dp-01-53, Resources for the Future.
    9. Margaret Insley, 2003. "On the option to invest in pollution control under a regime of tradable emissions allowances," Canadian Journal of Economics, Canadian Economics Association, vol. 36(4), pages 860-883, November.
    10. Stratford Douglas & Seth Wiggins, 2015. "Effects of Acid Rain Regulations on Production of Eastern Coals of Varying Sulfur Content," Working Papers 15-38, Department of Economics, West Virginia University.
    11. Olivier Rousse & Benoît Sévi, 2005. "Behavioral Heterogeneity in the US Sulfur Dioxide Emissions Allowance Trading Program," ERSA conference papers ersa05p550, European Regional Science Association.
    12. Curtis Carlson & Dallas Burtraw & Maureen Cropper & Karen L. Palmer, 2000. "Sulfur Dioxide Control by Electric Utilities: What Are the Gains from Trade?," Journal of Political Economy, University of Chicago Press, vol. 108(6), pages 1292-1326, December.
    13. Holland, Stephen P. & Moore, Michael R., 2013. "Market design in cap and trade programs: Permit validity and compliance timing," Journal of Environmental Economics and Management, Elsevier, vol. 66(3), pages 671-687.
    14. B Hansjürgens, 1998. "The Sulfur Dioxide Allowance-Trading Program in the USA: Recent Developments and Lessons to be Learned," Environment and Planning C, , vol. 16(3), pages 341-361, June.
    15. Burtraw, Dallas, 1998. "Cost Savings, Market Performance, and Economic Benefits of the U.S. Acid Rain Program," Discussion Papers 10885, Resources for the Future.
    16. Richard Schmalensee & Robert N. Stavins, 2019. "Policy Evolution under the Clean Air Act," Journal of Economic Perspectives, American Economic Association, vol. 33(4), pages 27-50, Fall.
    17. 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.
    18. Lile, Ronald D. & Burtraw, Dallas, 1998. "State-Level Policies and Regulatory Guidance for Compliance in the Early Years of the SO2 Emission Allowance Trading Program," Discussion Papers 10828, Resources for the Future.
    19. Richard Schmalensee & Robert N. Stavins, 2017. "Lessons Learned from Three Decades of Experience with Cap and Trade," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 11(1), pages 59-79.
    20. Schwarze, Reimund & Zapfel, Peter, 1998. "Sulfur allowance trading and the regional clean air incentives market: How similar are the programs really?," MPRA Paper 52751, University Library of Munich, Germany, revised 02 Nov 1999.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rff:dpaper:dp-99-25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Resources for the Future (email available below). General contact details of provider: https://edirc.repec.org/data/rffffus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.