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The US Acid Rain Program: Design, Performance, and Assessment

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  • G T Svendsen

    (Department of Economics, Aarhus School of Business, 8210 Aarhus V, Denmark)

Abstract

The US Acid Rain Program (ARP) has since 1990 allowed 1000 major electric utilities all over the USA to trade SO 2 emission permits. Historical emission rights have heen grandfathered and the target level is a 50% reduction in SO 2 emissions. Market performance has been successful, with much trade activity and unexpectedly low permit prices. Property rights to permits have been well defined, strictly enforced, and sources have been allowed to trade freely without the need for administrative approval for each transaction. Ignoring source location in this way has kept transaction costs at a minimum. In conclusion, the policy design of the ARP is recommendable for future environmental regulation where source location may be ignored, for example, for creating CO 2 markets in the USA and the European Union.

Suggested Citation

  • G T Svendsen, 1998. "The US Acid Rain Program: Design, Performance, and Assessment," Environment and Planning C, , vol. 16(6), pages 723-734, December.
    • Handle: RePEc:sae:envirc:v:16:y:1998:i:6:p:723-734
    DOI: 10.1068/c160723
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    References listed on IDEAS

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    1. Renee Rico, 1995. "The U.S. allowance trading system for sulfur dioxide: An update on market experience," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 5(2), pages 115-129, March.
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    Cited by:

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    2. Alessio D’Amato & Edilio Valentini, 2011. "Enforcement and environmental quality in a decentralized emission trading system," Journal of Regulatory Economics, Springer, vol. 40(2), pages 141-159, October.
    3. Daigneault, Adam & Greenhalgh, Suzie & Samarasinghe, Oshadhi, 2017. "Equitably slicing the pie: Water policy and allocation," Ecological Economics, Elsevier, vol. 131(C), pages 449-459.
    4. Svendsen, Gert Tinggaard & Christensen, Jan Lien, 1999. "The US SO2 auction: analysis and generalization," Energy Economics, Elsevier, vol. 21(5), pages 403-416, October.

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