The Impact of Trading on the Costs and Benefits of the Acid Rain Program / H. Ron Chan, B. Andrew Chupp, Maureen L. Cropper, Nicholas Z. Muller.

Format:

Book

Author/Creator:

Chan, H. Ron.

Contributor:

National Bureau of Economic Research.

Chupp, B. Andrew.

Cropper, Maureen L.

Muller, Nicholas Z.

Series:

Working Paper Series (National Bureau of Economic Research) no. w21383.

NBER working paper series no. w21383

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2015.

Summary:

This study quantifies the cost savings from the Acid Rain Program (ARP) compared with a command-and-control alternative and also examines the impact of trading under the ARP on health damages. To quantify cost savings, we compare compliance costs for non-NSPS (New Source Performance Standards) coal-fired Electricity Generating Units (EGUs) under the ARP with compliance costs under a uniform performance standard that achieves the same aggregate emissions. We do this for the year 2002, the third year of Phase II of the program. We find annual cost savings of approximately $240 million (1995$). To examine the health effects of trading, we compute the health damages associated with observed sulfur dioxide (SO2) emissions from all units regulated under the ARP in 2002--approximately 10.2 million tons--and compare them with damages from a No-Trade counterfactual in which each unit emits SO2 at a rate equal to its allocation of permits for the year 2002, plus any drawdown of its allowance bank. Damages under the ARP are $2.4 billion (2000$) higher than under the No-Trade. This reflects the transfer of allowances from EGUs west of the Mississippi River to units in the eastern US with higher exposed populations.

Notes:

Print version record

July 2015.