Controlling Industrial Pollution: The Economics and Politics of Clean Air

By Robert W. Crandall | Go to book overview

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A Practical Solution to the Control Problem: A Two-Part Tariff

With its development of offsets and bubbles the Environmental Protection Agency has begun to move from the detailed, inefficient approach to regulating individual point sources as envisioned in the Clean Air Act.1 The evolution toward a system of marketable rights has been impeded by a number of technical and legal problems. Little attention has been given to the integration of a penalty system with the evolving system of marketable rights. In this concluding chapter I propose an integration of enforcement penalties and marketable rights that may appear quite different from current policy. With a few legislative changes and a shift in administrative emphasis, the current system could easily be transformed into this more efficient approach.


The Two-Part Tariff: Quantities and Prices

The evolution in air pollution policy from mandated government standards to transferable emission reductions through bubbles or offsets has continued despite the disquieting effects of changes in administration, political haggles with interest groups and Congress, and adverse court decisions. At the same time simply refining the standard-setting process and creating new categories of mandated standards is neither workable nor efficient. The evolution toward marketable rights is essentially rescuing the EPA and Congress from the bureaucratic nightmare of implementing and enforcing increasingly complicated technology- based standards.

The central feature of a system of transferable pollution rights is that it divorces the distribution issues from the allocation problem. If the

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1
See chapter 5.

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