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66
it is more complex than what economic theory predicts. In recent years, it has been
identified that the transaction costs associated with institutional transition and policy
enforcement in emissions trading lead to less effective implementation (Foster and
Hahn, 1995, Montero, 1997, Stavins, 1995, Woerdman, 2001), a fact that had been
overlooked by economists and policy makers. It becomes increasingly clear that
market-based instruments can bring a lot of challenges to governmental agencies in
policy implementation, since the incentive structures and institutional constraints of
market-based environmental policies are quite different from those of
command-and-control instruments, and transaction costs associated with these issues
may not be easily overcome (Woerdman, 2004). Both regulators and businesses have
to face a lot of uncertainties when designing and implementing such a complex
system. For example, Emission Reduction Market System (ERMS), Chicago’s
regional emissions trading program for the reduction of volatile organic material
(VOM), has encountered many unexpected problems during the implementation
process, which include inappropriate initial goal setting, limited trading, and facility
closure (Evans and Kruger, 2006). Chicago’s experience with emissions trading
illustrates the uncertainties in the real world context and the difficulties in
implementation. It is not surprising that carefully-designed emissions trading
programs may end up with unsatisfactory outcomes.
4.1.2 The Case of RECLAIM: Implementation and Rulemaking
Similar to Chicago’s ERMS program, Southern California’s Regional Clean
Air Incentives Market (RECLAIM) is a regional air emissions trading program. As an
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 77 |
| Contributing entity | University of Southern California |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 66 it is more complex than what economic theory predicts. In recent years, it has been identified that the transaction costs associated with institutional transition and policy enforcement in emissions trading lead to less effective implementation (Foster and Hahn, 1995, Montero, 1997, Stavins, 1995, Woerdman, 2001), a fact that had been overlooked by economists and policy makers. It becomes increasingly clear that market-based instruments can bring a lot of challenges to governmental agencies in policy implementation, since the incentive structures and institutional constraints of market-based environmental policies are quite different from those of command-and-control instruments, and transaction costs associated with these issues may not be easily overcome (Woerdman, 2004). Both regulators and businesses have to face a lot of uncertainties when designing and implementing such a complex system. For example, Emission Reduction Market System (ERMS), Chicago’s regional emissions trading program for the reduction of volatile organic material (VOM), has encountered many unexpected problems during the implementation process, which include inappropriate initial goal setting, limited trading, and facility closure (Evans and Kruger, 2006). Chicago’s experience with emissions trading illustrates the uncertainties in the real world context and the difficulties in implementation. It is not surprising that carefully-designed emissions trading programs may end up with unsatisfactory outcomes. 4.1.2 The Case of RECLAIM: Implementation and Rulemaking Similar to Chicago’s ERMS program, Southern California’s Regional Clean Air Incentives Market (RECLAIM) is a regional air emissions trading program. As an |
