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99
“cap-and-trade” model, and many features impose stringent restrictions on trading,
which cause market distortions in RECLAIM.
As analyzed in previous chapters, stakeholders who have participated in
RECLAIM’s rulemaking can be divided into three categories: businesses,
environmental and public health groups, and governments. Different stakeholders have
different concerns over parameters of the program. To make the RECLAIM politically
acceptable and administratively implementable, SCAQMD has made many
compromises and revised the program in many aspects since the discussion of this
program. For example, the allocation of RTCs is based on the principle of
“Grandfathering”, which is less efficient than auction mechanisms. Due to “hot time
spot” and “hot zone” concerns of governmental agencies and environmental groups,
strict restrictions on inter-temporal trading and inter-regional trading were adopted.
Due to job loss concerns from local governments and concerns of compliance costs,
small business and facilities were excluded from the program. Moreover, since the
prices of RTCs skyrocketed during the 2000 “energy crisis”, some backstop provisions
were added into the RECLAIM rules to establish a price intervention mechanism if the
prices of RTCs reach a certain level.
In recent years, increasing attention has been paid to the political obstacles to
implementation of emissions trading (Joskow and Schmalensee, 1998, Thompson,
2000), and some studies have identified the impacts of inadequate rules on market
outcomes. For example, Zhang (2008) finds that inter-temporal trading and banking
may reduce uncertainty in emissions trading markets. Grandfathering is usually
regarded as a less efficient mechanism of resources allocation in comparison with
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 110 |
| Contributing entity | University of Southern California |
| Repository email | cisadmin@lib.usc.edu |
| Full text | 99 “cap-and-trade” model, and many features impose stringent restrictions on trading, which cause market distortions in RECLAIM. As analyzed in previous chapters, stakeholders who have participated in RECLAIM’s rulemaking can be divided into three categories: businesses, environmental and public health groups, and governments. Different stakeholders have different concerns over parameters of the program. To make the RECLAIM politically acceptable and administratively implementable, SCAQMD has made many compromises and revised the program in many aspects since the discussion of this program. For example, the allocation of RTCs is based on the principle of “Grandfathering”, which is less efficient than auction mechanisms. Due to “hot time spot” and “hot zone” concerns of governmental agencies and environmental groups, strict restrictions on inter-temporal trading and inter-regional trading were adopted. Due to job loss concerns from local governments and concerns of compliance costs, small business and facilities were excluded from the program. Moreover, since the prices of RTCs skyrocketed during the 2000 “energy crisis”, some backstop provisions were added into the RECLAIM rules to establish a price intervention mechanism if the prices of RTCs reach a certain level. In recent years, increasing attention has been paid to the political obstacles to implementation of emissions trading (Joskow and Schmalensee, 1998, Thompson, 2000), and some studies have identified the impacts of inadequate rules on market outcomes. For example, Zhang (2008) finds that inter-temporal trading and banking may reduce uncertainty in emissions trading markets. Grandfathering is usually regarded as a less efficient mechanism of resources allocation in comparison with |
