TY - JOUR
T1 - Comparison of net benefits of incentive-based and command and control environmental regulations
T2 - The case of Santiago, Chile
AU - O'Ryan, Raúl
AU - Sánchez, José Miguel
N1 - Funding Information:
Raúl O’Ryan (corresponding author) is an associate professor of economics in the Department of Industrial Engineering at Universidad de Chile, Santiago; his email address is [email protected]. José Miguel Sánchez is professor of economics in the Instituto de Economía at Pontificia Universidad Católica de Chile, Santiago; his e-mail address is [email protected]. The authors would like to thank Juan Pablo Montero for helpful comments and suggestions and Rodrigo Bravo, Jaques Clerc, and Carlos Holz for excellent research assistance. They also benefited greatly from the comments of three anonymous referees. An earlier draft of this article was presented at the Second World Congress of Environmental and Resource Economists at Monterey, California, in June 2002. The authors gratefully acknowledge financial support from Fondecyt grant 1990617.
PY - 2008
Y1 - 2008
N2 - The ambient permit system proposed in the literature for cost-effective pollution reduction is difficult to implement and may result in lower net benefits than using another instrument. The article develops a model for comparing the environmental net benefits of three policy instruments for Santiago, Chile, when the policy problem is to meet a given ambient quality standard. Two market-based instruments - the ambient permit system and a simpler emission permit system - are examined along with an emission standard, a command and control instrument usually favored by regulators. Both emission permit system and emission standard are costlier than the ambient permit system, sometimes in large part because they improve ambient emission concentrations beyond the required target in much of the city, but the ambient permit system requires a lower degree of control to comply with the standard. The somewhat costlier emission permit system and emission standard provide much higher net benefits than the ambient permit system when the health benefits of their "excessive" air quality improvements are taken into account. These benefits are different from the fact that an ambient permit system is administratively costlier to implement.
AB - The ambient permit system proposed in the literature for cost-effective pollution reduction is difficult to implement and may result in lower net benefits than using another instrument. The article develops a model for comparing the environmental net benefits of three policy instruments for Santiago, Chile, when the policy problem is to meet a given ambient quality standard. Two market-based instruments - the ambient permit system and a simpler emission permit system - are examined along with an emission standard, a command and control instrument usually favored by regulators. Both emission permit system and emission standard are costlier than the ambient permit system, sometimes in large part because they improve ambient emission concentrations beyond the required target in much of the city, but the ambient permit system requires a lower degree of control to comply with the standard. The somewhat costlier emission permit system and emission standard provide much higher net benefits than the ambient permit system when the health benefits of their "excessive" air quality improvements are taken into account. These benefits are different from the fact that an ambient permit system is administratively costlier to implement.
UR - http://www.scopus.com/inward/record.url?scp=47049085743&partnerID=8YFLogxK
U2 - 10.1093/wber/lhm013
DO - 10.1093/wber/lhm013
M3 - Article
AN - SCOPUS:47049085743
SN - 0258-6770
VL - 22
SP - 249
EP - 269
JO - World Bank Economic Review
JF - World Bank Economic Review
IS - 2
ER -
