Market-Based Approaches in Air Pollution Control: Theory and Practice

Title: Market-Based Approaches in Air Pollution Control: Theory and Practice
Authors: Zhang, Yue
Date: 2012
Abstract: Emissions Trading, a market-based instrument used for environmental proctection, has been adopted as one of the primary tools for emissions control in developed countries, and is being implemented in developing countries, in the context of increasing international cooperation to reduce greenhouse gas emissions (and other pollutant emissions) under the Kyoto Protocol, Emission trading is in theory both cost effective and environment effective, but implementation of such programs has never been trivial or easy. It took the U.S. more than three decades to implement what is now the world's most sophisticated, full-blown and successful functioning emissions trading program, and it will take more to duplicate the success of the US. programs in other developed countries, and much more in developing countries. Valuable lessons have been learned for designing and implementing efficient and effective emissions trading programs from the U.S. and other developed countries' success, and great challenged and obstacles have been revealed from the developing countries' failure. This paper examines two succesful examples of emissions trading programs: the U.S. program and the EU programs, as well as two representative unsuccessful programs in China and Chili. The examination attributes the success of the U.S. and EU programs to an efficient combination of trading options, such as banking and auctioning, and reveals the most common challenges and obstacles hampering success in developing countries, such as inefficient institutional arrangements, insufficient market information and inadequate regulatory intervention. By raising awareness and caution of the pros and cons of emissions trading schemes and their feasibility and practicality, this paper will hopefully contribute to a better understanding of the public policy challenges that lie ahead for countries that are new at working with such programs.
CollectionScience économique - Mémoires // Economics - Research Papers