The Impact of Trading on the Costs and Benefits of the Acid Rain Program
Hei Sing Chan (ron.chan@manchester.ac.uk),
Benjamin Chupp,
Maureen Cropper and
Nicholas Muller
No 21383, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
This study quantifies the cost savings from the Acid Rain Program (ARP) compared with a command-and-control alternative and also examines the impact of trading under the ARP on health damages. To quantify cost savings, we compare compliance costs for non-NSPS (New Source Performance Standards) coal-fired Electricity Generating Units (EGUs) under the ARP with compliance costs under a uniform performance standard that achieves the same aggregate emissions. We do this for the year 2002, the third year of Phase II of the program. We find annual cost savings of approximately $240 million (1995$). To examine the health effects of trading, we compute the health damages associated with observed sulfur dioxide (SO2) emissions from all units regulated under the ARP in 2002—approximately 10.2 million tons—and compare them with damages from a No-Trade counterfactual in which each unit emits SO2 at a rate equal to its allocation of permits for the year 2002, plus any drawdown of its allowance bank. Damages under the ARP are $2.4 billion (2000$) higher than under the No-Trade. This reflects the transfer of allowances from EGUs west of the Mississippi River to units in the eastern US with higher exposed populations.
JEL-codes: Q51 Q52 Q58 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-ene and nep-env
Note: EEE
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Citations: View citations in EconPapers (16)
Published as H. Ron Chan & B. Andrew Chupp & Maureen L. Cropper & Nicholas Z. Muller, 2017. "The Impact of Trading on the Costs and Benefits of the Acid Rain Program," Journal of Environmental Economics and Management, .
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Journal Article: The impact of trading on the costs and benefits of the Acid Rain Program (2018)
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