Robbing Peter to Pay Paul: The Impact of California’s Cap-and-Trade Program on Toxic Emissions

Narae Lee () and Aseem Kaul ()
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Narae Lee: Business and Technology Management, Korea Advanced Institute of Science and Technology, Daejeon 34141, Republic of Korea
Aseem Kaul: Carlson School of Management, The University of Minnesota, Minneapolis, Minnesota 55455

Management Science, 2025, vol. 71, issue 6, 5409-5418

Abstract: We empirically examine the consequences of the introduction of a cap-and-trade program in California, showing that although the program helped reduce greenhouse gas (GHG) emissions, it had the unintended consequence of increasing toxic emissions from treated facilities, as facilities cut back on their waste-treatment efforts to reduce GHG emissions. We further show that this effect was weaker for more harmful toxins, for facilities that had invested in reducing toxic waste at source, and for those that were subject to close scrutiny from regulators, consistent with it being the result of strategic firm actions.

Keywords: environmental sustainability; toxic emissions; regulation; multiple objectives; social impact; climate change (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:71:y:2025:i:6:p:5409-5418

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