Working Paper: NBER ID: w15082
Authors: Meredith Fowlie; Stephen P. Holland; Erin T. Mansur
Abstract: A perceived advantage of cap-and-trade programs over more prescriptive environmental regulation is that enhanced compliance flexibility and cost effectiveness can make more stringent emissions reductions politically feasible. However, increased compliance flexibility can also result in an inequitable distribution of pollution. We investigate these issues in the context of Southern California's RECLAIM program. We match facilities in RECLAIM with similar California facilities also located in non-attainment areas. Our results indicate that emissions fell approximately 24 percent, on average, at RECLAIM facilities relative to our counterfactual. Furthermore, we find that observed changes in emissions do not vary significantly with neighborhood demographic characteristics.
Keywords: emissions markets; NOx trading; environmental justice; cap-and-trade; RECLAIM
JEL Codes: L5; Q52; Q53; R20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| RECLAIM program (R52) | emissions reductions (Q52) |
| RECLAIM program (R52) | emissions at RECLAIM facilities (L99) |
| emissions at RECLAIM facilities (L99) | counterfactual emissions from similar facilities (L94) |
| neighborhood demographic characteristics (R23) | emissions reductions (Q52) |
| RECLAIM program (R52) | emissions reductions across different communities (R23) |