Comparison of Net Benefits of Incentive-Based and Command and Control Environmental Regulations: The Case of Santiago, Chile

Raúl O'Ryan () and José Sánchez ()

The World Bank Economic Review, 2007, vol. 22, issue 2, 249-269

Abstract: The ambient permit system proposed in the literature for cost-effective pollution reduction is difficult to implement and may result in lower net benefits than using another instrument. The article develops a model for comparing the environmental net benefits of three policy instruments for Santiago, Chile, when the policy problem is to meet a given ambient quality standard. Two market-based instruments--the ambient permit system and a simpler emission permit system--are examined along with an emission standard, a command and control instrument usually favored by regulators. Both emission permit system and emission standard are costlier than the ambient permit system, sometimes in large part because they improve ambient emission concentrations beyond the required target in much of the city, but the ambient permit system requires a lower degree of control to comply with the standard. The somewhat costlier emission permit system and emission standard provide much higher net benefits than the ambient permit system when the health benefits of their "excessive" air quality improvements are taken into account. These benefits are different from the fact that an ambient permit system is administratively costlier to implement. Copyright The Author 2007. Published by Oxford University Press on behalf of the International Bank for Reconstruction and Development / the world bank . All rights reserved. For permissions, please e-mail: journals.permissions@oxfordjournals.org, Oxford University Press.

Date: 2007
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1093/wber/lhm013 (application/pdf)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:oup:wbecrv:v:22:y:2007:i:2:p:249-269

Ordering information: This journal article can be ordered from
https://academic.oup.com/journals

Access Statistics for this article

The World Bank Economic Review is currently edited by Eric Edmonds and Nina Pavcnik

More articles in The World Bank Economic Review from World Bank Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK. Contact information at EDIRC.
Bibliographic data for series maintained by Oxford University Press ().