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What Can We Learn from the End of the Grand Policy Experiment? The Collapse of the National SO 2 Trading Program and Implications for Tradable Permits as a Policy Instrument

Author

Listed:
  • David A. Evans

    (National Center for Environmental Economics, US Environmental Protection Agency, Washington, DC 20460)

  • Richard T. Woodward

    (Department of Agricultural Economics, Texas A&M University, College Station, Texas 77840)

Abstract

The 1990 amendments to the Clean Air Act created a trading program in sulfur dioxide (SO2) emissions that has served as the seminal example of how an emissions trading program could be designed. Yet despite its success, the trading program was essentially brought to an end by a series of regulatory and judicial actions. We begin with a brief discussion of the theoretical and historical antecedents to the SO2 trading program. We then describe the events that led to the program’s effective end in 2011. We argue that the SO2 trading program had two key vulnerabilities: SO2 emissions cause multiple environmental impacts, some with local consequences, and internal conflicts within the Clean Air Act. Because of these vulnerabilities, in the end, the program was unsustainable. We close with a discussion of the lessons that can be drawn from this history for future emissions trading programs.

Suggested Citation

  • David A. Evans & Richard T. Woodward, 2013. "What Can We Learn from the End of the Grand Policy Experiment? The Collapse of the National SO 2 Trading Program and Implications for Tradable Permits as a Policy Instrument," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 325-348, June.
    • Handle: RePEc:anr:reseco:v:5:y:2013:p:325-348
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-091912-151835
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    Citations

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    Cited by:

    1. Richard T. Woodward & Amanda Stronza & Elizabeth Shapiro‐Garza & Lee A. Fitzgerald, 2014. "Market‐based conservation: Aligning static theory with dynamic systems," Natural Resources Forum, Blackwell Publishing, vol. 38(4), pages 235-247, November.
    2. Burtraw, Dallas & Woerman, Matt, 2013. "Economic ideas for a complex climate policy regime," Energy Economics, Elsevier, vol. 40(S1), pages 24-31.
    3. Woerdman Edwin & Nentjes Andries, 2019. "Emissions Trading Hybrids: The Case of the EU ETS," Review of Law & Economics, De Gruyter, vol. 15(1), pages 1-32, March.

    More about this item

    Keywords

    sulfur dioxide; Title IV; emissions trading; NAAQS; cap and trade;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy

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