The Impact of Trading on the Costs and Benefits of the Acid Rain Program

Chan, H. Ron; Chupp, B. Andrew; Cropper, Maureen; Muller, Nicholas Z.

doi:10.2139/ssrn.3029521

Cited by 4 publications

(4 citation statements)

References 37 publications

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“…Given the significant implications for economic performance and environmental policy, many studies have examined the feasibility, abatement costs, and benefits of the SETPS. 11–13 However, few studies have investigated whether it has improved the environment and stimulated economic growth in China.…”

Section: Introductionmentioning

confidence: 99%

Environmental and economic effects of sulfur dioxide emissions trading pilot scheme in China: A quasi-experiment

Gao

Guo

et al. 2019

Energy & Environment

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In this study, we consider the sulfur dioxide emissions trading pilot scheme (SETPS) of China, with pilot provinces as the treatment group and other provinces as the control group. We employ the difference-in-differences method to estimate the effects of the SETPS on pollution mitigation and economic growth. Results show that the SETPS plays a robust role both in China’s industrial sulfur dioxide abatement and in economic growth. Furthermore, by applying regression analysis to explore regional heterogeneity, we find that it has a stronger effect on industrial sulfur dioxide reduction in the Central China than it does in the Eastern and Western China, and it also exerts a positive influence on economic growth in the Western China. Moreover, a time-trend analysis indicates that the pollution reduction effect of the SETPS has decreased, while the economic growth effect has slightly increased since 2007.

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Section: Introductionmentioning

confidence: 99%

Environmental and economic effects of sulfur dioxide emissions trading pilot scheme in China: A quasi-experiment

Gao

Guo

et al. 2019

Energy & Environment

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“…For instance, Fowlie et al (2016) develop a dynamic oligopoly model to numerically compare firms' entry/exit decisions and capacity investments on the product market under different permit allocation regimes, but do not consider banking provisions to isolate the allocation impacts. Similarly, to assess cost savings and health impacts under the ARP, Chan et al (2018) use a static model of compliance choices (fuel switch, permit purchase, scrubber installation) to sidestep the complexities associated with modeling banking and permit purchase as an option to install a scrubber or fuel switch at a later date. 14 Both approaches are therefore likely to overemphasize the spatial trading dimension.…”

Section: Contextualizationmentioning

confidence: 99%

Emissions trading with transaction costs

Baudry

Faure

Quemin

2021

Journal of Environmental Economics and Management

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We develop an equilibrium model of emissions permit trading in the presence of fixed and proportional trading costs in which the permit price and firms' participation in and extent of trading are endogenously determined. We analyze the sensitivity of the equilibrium to changes in the trading costs and firms' allocations, and characterize situations where the trading costs alternatively depress or raise permit prices relative to frictionless market conditions. We calibrate our model to annual transaction and compliance data in Phase II of the EU ETS (2008)(2009)(2010)(2011)(2012) which we consolidate at the firm level. We find that trading costs in the order of 10 ke per annum plus 1 e per permit traded substantially reduce discrepancies between observations and theoretical predictions for firms' behavior (e.g. autarkic compliance). Our simulations suggest that ignoring trading costs leads to an underestimation of the price impacts of supply-curbing policies, this difference varying with the incidence on firms.

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“…This was followed by articles that examined the benefits of trading allowances to reduce sulfur dioxide (SO 2 ) emissions by electric utilities under the Acid Rain Program, rather than imposing a uniform performance standard on generating units (Carlson et al 2000, Chan et al 2018). These papers provide estimates of the benefits of trading, which suggest significant gains from trading allowances rather than relying on a uniform performance standard.…”

Section: Evaluation Of Environmental Programsmentioning

confidence: 99%

“…More recently, Andrew Chupp, Nick Muller, Ron Chan, and I conducted an ex post study of the gains from trade under the SO 2 Allowance Program (versus a uniform performance standard) using a structural approach to estimating compliance costs (Chan et al 2018). This evaluation of programs doesn't fit into the mold of the very excellent work that has been done using quasiexperimental methods.…”

Section: Sussman: and A Decent First Baseman From What I Heardmentioning

confidence: 99%

A Conversation with Maureen Cropper

Cropper

Kling

Sussman³

2019

Annu. Rev. Resour. Econ.

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This article presents an interview with environmental economist Maureen L. Cropper. Maureen completed her Ph.D. at Cornell University and subsequently held positions at the University of California, Riverside, and the University of Southern California. At Riverside, she moved from monetary economics to environmental economics. She then landed at the University of Maryland, where she is a still a professor. She has taken on leadership roles in numerous institutional settings, including the US National Academy of Sciences and the US Environmental Protection Agency (EPA) Science Advisory Board. Her contributions to environmental economics have been groundbreaking and extensive. Together with many collaborators—including former students and colleagues at the University of Maryland, World Bank, EPA, and Resources for the Future—Maureen has produced a body of work that spans theory, methods, and empirical applied economics. Her work covers the environment, energy, climate change, and transportation in both the United States and developing countries.

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The Impact of Trading on the Costs and Benefits of the Acid Rain Program

Abstract: NBER working papers are circulated for discussion and comment purposes. They have not been peer-reviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.

Cited by 4 publications

References 37 publications

Environmental and economic effects of sulfur dioxide emissions trading pilot scheme in China: A quasi-experiment

Environmental and economic effects of sulfur dioxide emissions trading pilot scheme in China: A quasi-experiment

Emissions trading with transaction costs

A Conversation with Maureen Cropper

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