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19
technology and reduce pollution emission (Freeman, 2002), and one major example is
cap-and-trade (CAT) emissions trading.
In cap-and-trade (CAT), the total emission level is set by the government at the
beginning and then it will decrease year by year (Joskow and Schmalensee, 1998).
Meanwhile, emission permits are allocated to market participants either by auction or
grandfathering, and then traded within the market. From the perspective of economics,
these emission permits are clearly assigned property rights. Since different participants
have different marginal costs of emission reduction, a participant may choose to buy
emission permits when market price of permit is below its own abatement cost. The
choice between using and trading depends on which way is more profitable for the
participant, and thus CAT represents “an environmental policy tool that delivers
results with a mandatory cap on emissions while providing emission sources
flexibility in how to comply”.7 Thus, emissions trading has been regarded as a more
efficient tool of environmental regulation, and it is expected to be able to provide a
better tool for government to control the aggregated environmental outcome. This is
why emissions trading has been increasingly embraced by both economists and policy
makers in many parts of the world. However, it is also noticed that emissions trading
has been “rarely used” for a long time (Joskow and Schmalensee, 1998, p. 37),
partially due to the difficulty of implementation or the lack of adequate regulatory
capacity. In the following section, I will briefly review existing programs of emissions
trading.
7 For details, see the website of Environmental Protection Agency: Cap and Trade: Essentials,
http://www.epa.gov/airmarkets/capandtrade/ctessentials.pdf, visited on April 22, 2005.
Object Description
| Title | Processes, effects, and the implementation of market-based environmental policy: southern California's experiences with emissions trading |
| Author | Zhan, Xueyong |
| Author email | xzhan@usc.edu; xueyongzhan@gmail.com |
| Degree | Doctor of Philosophy |
| Document type | Dissertation |
| Degree program | Public Administration |
| School | School of Policy, Planning, and Development |
| Date defended/completed | 2008-07-01 |
| Date submitted | 2008 |
| Restricted until | Unrestricted |
| Date published | 2008-10-30 |
| Advisor (committee chair) | Tang, Shui-Yan |
| Advisor (committee member) |
Mazmanian, Daniel A. Henry, Ronald |
| Abstract | This research provides a positive explanation of the implementation processes and effects of market-based environmental policy by conducting a case study on RECLAIM (Regional Clean Air Incentives Market), the first regional emission permits trading program that has been implemented by South Coast Air Quality Management District (SCAQMD) to address air pollution problems in the Los Angeles air basin since 1994.; Firstly, I developed a game theoretic model of environmental policy implementation. This model integrates theories of administrative rulemaking, policy implementation, institutional rational choice and transaction cost politics. I argue that administrative agency tries to minimize political transaction costs of policy implementation when writing rules.; Based on the formal model, I conducted a quantitative analysis to examine the interactions between SCAQMD and its key stakeholders, such as federal, state and local governments, businesses, and environmental NGOs, during the rulemaking of RECLAIM. I found that SCAQMD is more likely to adopt rule changes suggested by state and federal environmental agencies. This research identifies the dominant role of organized interest groups, the existence of interagency lobbying, and the lack of citizen control over the rulemaking of RECLAIM. Furthermore, I conducted an evaluation of the rules governing the RECLAIM program, and I identify the major distortions of the RECLAIM rules in comparison with an ideal cap-and-trade emissions trading market. Also, I used OLS regression to examine the effects of policy difference on emission level in California between 1990 and 1999. This evaluation fails to reject the null hypothesis that using cap-and-trade (CAT) compared with using command-and-control (CAC) has no different effects on emission of both NOx and SO2 from point sources at the county level in California in the 1990's.; In summary, this research finds that the implementation of emissions trading is political, and interest group politics may distort the regulatory design and implementation of an emissions trading program. While cap-and-trade is promising to better protect our environment and natural resources, its implementation is conditioned by many political and administrative factors. Inadequate rules may come as the results of political compromises, and they may impact the functioning of an emissions trading system. |
| Keyword | emissions trading; rulemaking; RECLAIM; implementation; environmental governance |
| Geographic subject (city or populated place) | Los Angeles |
| Geographic subject (state) | California |
| Coverage date | 1990/2000 |
| Language | English |
| Part of collection | University of Southern California dissertations and theses |
| Publisher (of the original version) | University of Southern California |
| Place of publication (of the original version) | Los Angeles, California |
| Publisher (of the digital version) | University of Southern California. Libraries |
| Provenance | Electronically uploaded by the author |
| Type | texts |
| Legacy record ID | usctheses-m1719 |
| Contributing entity | University of Southern California |
| Rights | Zhan, Xueyong |
| Repository name | Libraries, University of Southern California |
| Repository address | Los Angeles, California |
| Repository email | cisadmin@lib.usc.edu |
| Filename | etd-Zhan-2335 |
| Archival file | uscthesesreloadpub_Volume44/etd-Zhan-2335.pdf |
Description
| Title | Page 30 |
| Contributing entity | University of Southern California |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 19 technology and reduce pollution emission (Freeman, 2002), and one major example is cap-and-trade (CAT) emissions trading. In cap-and-trade (CAT), the total emission level is set by the government at the beginning and then it will decrease year by year (Joskow and Schmalensee, 1998). Meanwhile, emission permits are allocated to market participants either by auction or grandfathering, and then traded within the market. From the perspective of economics, these emission permits are clearly assigned property rights. Since different participants have different marginal costs of emission reduction, a participant may choose to buy emission permits when market price of permit is below its own abatement cost. The choice between using and trading depends on which way is more profitable for the participant, and thus CAT represents “an environmental policy tool that delivers results with a mandatory cap on emissions while providing emission sources flexibility in how to comply”.7 Thus, emissions trading has been regarded as a more efficient tool of environmental regulation, and it is expected to be able to provide a better tool for government to control the aggregated environmental outcome. This is why emissions trading has been increasingly embraced by both economists and policy makers in many parts of the world. However, it is also noticed that emissions trading has been “rarely used” for a long time (Joskow and Schmalensee, 1998, p. 37), partially due to the difficulty of implementation or the lack of adequate regulatory capacity. In the following section, I will briefly review existing programs of emissions trading. 7 For details, see the website of Environmental Protection Agency: Cap and Trade: Essentials, http://www.epa.gov/airmarkets/capandtrade/ctessentials.pdf, visited on April 22, 2005. |
