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1、Chapter 16 Stationary-Source Local Air Pollution Chapter 16 discusses policy responses to stationary sources of air pollution.Using the theoretical basis from Chapter 15,this chapter gives a historical assessment of problems and policy approaches to dealing with air pollution.Much of this material i
2、s quite different from the material related to resource allocation.This chapter and the next several will give you ample opportunity to explore cost-effective pollution control policy and efficient levels of pollution using case study examples.1.Present a brief history of the Clean Air Act and its a
3、mendments.2.Provide definitions for the categories of pollutants and types of standards.Describe the Command-and-Control Approach,and discuss the five criteria we can use to evaluate its efficiency.3.Outline and define some of the language used in the Clean Air Act such as nonattainment areas,lowest
4、 achievable emission rate and best available technology.4.Outline and characterize some of the recent policy innovations including emission trading,the offset program,smog trading and emissions charges.5.Characterize the level of potential efficiency for each of these programs.6.Give examples of eac
5、h of these programs.Discuss successes and failures.I.Introduction A.The Air Pollution Act of 1955 mainly served to subsidize research into air pollution problems.B.With the introduction of the 1967 Clean Air Act,the federal government began to play a larger role in encouraging states to limit pollut
6、ion,but states were mostly unwilling to cooperate.C.The Clean Air Act Amendments were passed in 1970.The federal government assumed a much larger role in the prevention of pollution.With these amendments,the U.S.Environmental Protection Agency(EPA)was created as the federal pollution control authori
7、ty.D.Policies were developed based on whether a pollutant was a“conventional”pollutant or a“hazardous”pollutant.The focus in this chapter is on conventional pollutants.96 Tietenberg/Lewis Environmental and Natural Resource Economics,Eighth Edition II.Conventional Pollutants This section examines pol
8、icies designed to deal with conventional or“criteria”pollutants.These are common substances such as sulfur oxides,particulates,carbon monoxide,ozone,nitrogen dioxide and lead.They are assumed to be dangerous only at high concentrations.A.The historical approach to air pollution control has been a tr
9、aditional command-and-control(CAC)approach based on emissions standards.B.For conventional pollutants,the first step is typically to establish ambient air quality standards.C.Ambient air quality standards set legal ceilings on the allowable concentration of the pollutant in the outdoor air for a spe
10、cified period of time.The period of time could be annually or a short-term average such as over a three-hour period.D.In the United States there are two defined ambient standards:1.All pollutants have a primary standard that is designed to protect human health.2.A secondary standard is set to protec
11、t aesthetics,physical objects and vegetation.E.Ambient standards are determined without regard to cost.(Table 16.1 provides some national ambient air quality standards.)F.The state governments are responsible for ensuring the standards are met.States must design state implementation plans(SIPs)that
12、must be approved by the EPA.Procedures for the abatement of pollutants that affect other states must be addressed by these plans.G.Nonattainment areas are areas not meeting the original deadlines.These areas were subjected to strict controls.Nonattainment areas fall into one of seven categories.The
13、more severe the nonattainment,the more stringent the control.H.State implementation plans in nonattainment regions must include a permit program for new or modified large sources.These sources must also control their own emissions to the lowest achievable emission rate(LAER).I.The Clean Air Act esta
14、blished the New Source Review Program(NSR)which requires all new sources and sources undergoing modification to seek a permit for operation.This program is controversial as highlighted in Debate 16.1.J.The EPA has also established national uniform emission standards for new sources of criteria pollu
15、tants.Standards governing new and modified sources of criteria pollutants are called the New Source Performance Standards(NSPS).These serve as minimum standards.K.Firms have economic incentives for noncompliance with regulations.New equipment is expensive and court procedures are slow.Because noncom
16、pliance with these regulations was a large problem,in 1977 Congress established a noncompliance penalty in an attempt to reduce the profitability in delaying compliance.The magnitude of the noncompliance penalty is determined by the economic value of delay to that source.L.There are five aspects of
17、the standard setting process we can examine when thinking about whether current policies are economically efficient:1.The threshold concept suggests that the standard is set using a given health threshold.A health threshold is defined as a margin of safety sufficiently high that no adverse health ef
18、fects would be suffered by any member of the population as long as the air quality is at least as good as that specified by the standard.This concept implies that the marginal damage function would be zero until the threshold was reached,but would be positive at higher concentrations.Evidence sugges
19、ts that this is not the case.Chapter 16 Stationary-Source Local Air Pollution 97 2.The level of the ambient standard is then set by some other basis.Efficiency requires a standard that maximizes net benefits.Since reliable benefits estimates are so difficult to obtain,and currently consideration of
20、cost is not necessary,it is impossible to know if the ambient standards are efficient.3.Standards also tend to be uniform across all of the country.Uniformity does not acknowledge the number of people exposed,the sensitivity of the area or the relative costs of compliance.4.The timing of emission fl
21、ows is important since concentrations are important for criteria pollutants.Economic efficiency would suggest tailoring the degree of control to the circumstancesin both space and time.The Clean Air Act,however,rules out intermittent controls.Constant controls also raise compliance costs.5.Most stan
22、dards are defined in terms of pollutant concentration,but typically health effects are more closely related to exposure.Thus indoor air quality is extremely important,yet is not part of the Clean Air Act.M.Though cost-effectiveness studies can result in standards being met in the least costly manner
23、,we still will not know how efficient or inefficient the standard is.N.Command-and-control(CAC)is typically not cost-effective.The ratio of CAC cost to least cost is presented in Table 16.2 and suggests widely varying differences in cost-effectiveness of CAC policies.O.CAC will be close to cost-effe
24、ctive only if a high degree of control is necessary such that all sources are forced to abate as much as is economically feasible.(The text cites several studies to support this claim,such as controlling SO2 emissions in Germany,as Example 16.1 illustrates)P.Example 16.1 looks at the command-and-con
25、trol of SO2 emissions in Germany.The U.S.experience and the German experience have been quite different with the U.S.pursuing emission trading.Q.While inefficient,CAC policies have resulted in better air quality in developed countries.Developing countries,however,need to find cost-effective ways to
26、improve air quality.R.Table 16.3 shows national improvement in air quality and reductions in emissions for the United States.III.Innovative Approaches This section presents case study examples of innovative approaches to pollution control.This will be a fun section to teach,as you can examine the pr
27、ogress of the emission trading program in the United States as well as examine other innovative programs such Californias Regional Clean Air Incentives Market(RECLAIM)program.Also discussed are Frances and Japans emissions charges and strategies to deal with hazardous pollutants.Students are most in
28、terested,it seems,in real world applications.Finding additional data to supplement this section is worthwhile.A.The U.S.Emissions Trading Program 1.The goal of the emissions trading program is to add flexibility to the manner in which the clean air objectives are met.Sources can mix and match as lon
29、g as an overall standard is met.2.This program uses an emission reduction credit(ERC).Certified credits could be banked,used or sold.To receive certification the emission reduction must be surplus,permanent and quantifiable.3.In the spending of emission reduction credits,the offset policy,an earlier
30、 application of emissions trading,allows qualified new or expanding sources to emit pollution in a nonattainment area,provided they acquire sufficient(usually 20 percent more than what actual emissions will be)ERCs from existing sources.98 Tietenberg/Lewis Environmental and Natural Resource Economic
31、s,Eighth Edition B.Effectiveness of the Offset Program 1.The program has substantially reduced the cost of complying with the Clean Air Act.2.Since marginal abatement costs in nonattainment areas are high,trading programs are appealing because they add flexibility.3.The initial allocation of permits
32、 has an effect on the potential for price-setting behavior.The farther the initial allocation diverges from the cost-effective allocation,the greater the potential for the price-setter to exercise market power.(This result is in contrast to Chapter 15.)Empirical studies suggest that high degrees of
33、collaboration must be present before control costs are affected to any large degree.C.Smog Trading 1.State initiatives have also resulted in innovative programs such as Californias RECLAIM.2.The 400 participating industry polluters under RECLAIM receive an annual pollution limit,which decreases by 5
34、8%annually for the next ten years.Polluters are allowed to use flexible approaches such as purchasing credits from other firms.3.The difference between the RECLAIM program and traditional programs is that a cap is set on total emissions for the group rather than for each source.Additionally,now it i
35、s the polluter who is responsible for identifying the appropriate control strategies rather than the control authority leading to many innovations.4.Initial allocations for RECLAIM were inflated in order for the program to gain political feasibility and thus fewer emissions were reduced.5.During the
36、 electricity deregulation fiasco in 2001 prices of emission allowances got so high that the“safety valve”mechanism in the RECLAIM program was triggered.The safety valve suspends the program and an alternative fee per ton program is imposed until prices of emission allowances go down below the thresh
37、old.D.Emission Charges 1.Economists usually suggest one of two types of emissions charges.a.An efficiency charge is set up to achieve an efficient outcome by forcing the polluter to compensate completely for all damage.b.A cost-effective charge is designed to achieve an ambient standard at the lowes
38、t possible cost.2.A system of air pollution emissions charges has been used in France and Japan.3.The French charge system is levied on approximately 1400 firmsall industrial firms having a power-generating capacity of 20 megawatts or more or industrial firms discharging over 150 metric tons of taxa
39、ble pollutants.The charge is levied on actual amounts emitted.The revenues are returned to the firms paying the charge mostly as a subsidy for installing abatement equipment.To date,the charge level has been too low to have any economic impact.4.In 1973,Japan passed the Law for the Compensation of P
40、ollution-Related Health Injury,which compensates victims for medical expenses,lost earnings and other expenses.The program is funded by an emissions charge on sulfur dioxides and from an automobile weight tax.The charge is calculated on the basis of the amount of compensation paid to victims of air
41、pollution in the previous year.Compensation amounts are rising while emissions are falling creating potential future revenue problems.5.Unlike trading programs or ERCs,where prices respond automatically,emissions charges must be set by an administrative process.Discussing the politically feasibility
42、 of frequently changing charges and taxes would be interesting at this point.Chapter 16 Stationary-Source Local Air Pollution 99 E.Hazardous Pollutants 1.The Clean Air Act sets up a special process for dealing with hazardous pollutantsthose that pose the risk of severe harm to human health.2.The Act
43、 requires the EPA to frequently identify hazardous pollutants.Once a substance is listed,the EPA has 180 days to regulate emissions.This requires setting a national standard for the pollutant.3.Some maintain that protecting the public from hazardous substances requires complete elimination of the su
44、bstance which would be very expensive.4.The EPA has incorporated risk assessment and benefit-cost analysis into their decisions.5.Once listed,the EPA must identify a level of control.This is done by comparing the costs of various control possibilities with the damages to health prevented by the cont
45、rols.6.The results of a 1983 benefit-cost analysis on regulating benzene,coke oven emissions and acrylonitrile is presented in Table 16.4.(Haigh,et al.,1983 Benefits Assessment and Environmental Regulation:Case Studies of Hazardous Air Pollutants,J.F.K.School of Government Energy and Environmental P
46、olicy Center Discussion Paper E-83-07.)Their results show a negative net benefit for all regulatory options estimated.Their results also suggest that more lives could be saved with the same expenditures of money if more resources are allocated to the control of substances justified with a lower valu
47、e of life and less to those that can be only be justified with a higher value of life,i.e.,force those emitters exposing larger numbers of people to a health risk to exert the greatest cleanup effort.7.Example 16.2 suggests that new technologies with reduced environmental impact are being developed
48、with the reduction of mercury use in chlorine production.Some,but not all,of the changes can be attributed to regulations.Your students may be frustrated by the idea that a firm would intentionally violate a pollution standard.The EPA penalties are designed such that the magnitude of the noncomplian
49、ce penalty is determined by the economic value of delay to that source.There are some simple noncompliance models that will illustrate this concept to your students.Abstracting from pollution control and discussing other behavior such as speeding on the highway or illegal fishing might help illustra
50、te the concepts.Simple examples illustrating the economic incentives to violate rules and regulations are useful.Students are also sometimes confused or troubled by the idea of selling rights to pollute.Reminding them that we already have a emission trading system may help justify the concept.The ex