First published in 1985, Emissions Trading was a comprehensive review of the first large-scale attempt to use economic incentives in environmental policy in the U.S. and of the empirical and theoretical research on which this approach is based. Since its publication it has consistently been one of the most widely cited works in the tradable permits literature. The second edition of this classic study of pollution reform considers how the use of transferable permits to control pollution has evolved, looks at how these programs have been implemented in the U.S. and internationally, and offers an objective evaluation of the resulting successes, failures, and lessons learned over the last twenty-five years.
'At its best in explaining both the complexities of emission trading program design and the intricacies of the economic theory underlying the tradable discharge permit system and its variations.' Journal of Policy Analysis and Management
Figures and Tables Preface Abbreviations Introduction Describing the Evolution The Evolution of Emissions Trading The Evolution of Design Features An Overview of the Book The Conceptual Framework The Regulatory Dilemma The Cost-Effectiveness Framework Cost-Effective Permit Markets The Role of Transactions Costs The Role of Administrative Costs The Role of Technical Change Summary The Consequences of Emissions Trading The Nature of the Evidence Ex Ante Evaluations: The Evidence Ex Post Evaluations: The Evidence Summary The Spatial Dimension Difficulties in Implementing an Ambient Permit System Possible Alternatives Summary The Temporal Dimension Borrowing, Banking, and the Nature of the Environmental Target Linking Emissions and Pollutant Concentrations The Role of Banking and Borrowing Strategies for Controlling Seasonal or Episodic Peaks Summary The Initial Allocation Initial Allocation Approaches Comparing the Allocation Approaches Cost-Effectiveness Implications of the Initial Allocation Summary Market Power Permit Price Manipulation: Conceptual Models Leveraging Power Between Output and Permit Markets Ex Ante Simulations Results from Experimental Studies Mechanisms for Controlling Market Power Programmatic Design Features That Affect Market Power Summary Monitoring and Enforcement The Nature of the Domestic Enforcement Process The Nature of the International Enforcement Process The Economics of Enforcement Current Enforcement Practice Summary Lessons Lessons About Program Effectiveness Lessons About Instrument Choice and Program Design Concluding Comments References Index