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A Virtual Field Trip to the Real World of Cap and Trade: Environmental Economics and the EPA SO 2 Allowance Auction

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  • Lynne Y. Lewis

Abstract

In the spring of 2001, Bates College Environmental Economics classes bought their first sulfur dioxide emissions allowance at U.S. Environmental Protection Agency's annual auction, then conducted by the Chicago Board of Trade. In the spring of 2010, they bought their 22nd through 34th allowances. This article describes a three-part method for teaching the theory and practice of tradable pollution allowances or cap and trade . Experiential learning allows for theoretical economic concepts to become engrained in a deeper way via hands-on experience. Assessment through student surveys suggests that students do solidify their knowledge of complex concepts such as discounting and efficient allowance prices with trading via this three-part technique.

Suggested Citation

  • Lynne Y. Lewis, 2011. "A Virtual Field Trip to the Real World of Cap and Trade: Environmental Economics and the EPA SO 2 Allowance Auction," The Journal of Economic Education, Taylor & Francis Journals, vol. 42(4), pages 354-365, October.
    • Handle: RePEc:taf:jeduce:v:42:y:2011:i:4:p:354-365
    DOI: 10.1080/00220485.2011.606086
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    References listed on IDEAS

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    1. Bohi, Douglas R. & Burtraw, Dallas, 1997. "SO2 Allowance Trading: How Experience and Expectations Measure Up," Discussion Papers 10878, Resources for the Future.
    2. Burtraw, Dallas & Palmer, Karen L., 2003. "The Paparazzi Take a Look at a Living Legend: The SO2 Cap-and-Trade Program for Power Plants in the United States," Discussion Papers 10665, Resources for the Future.
    3. Kruger, Joseph, 2005. "From SO2 to Greenhouse Gases: Trends and Events Shaping Future Emissions Trading Programs in the United States," Discussion Papers 10819, Resources for the Future.
    4. Kruger, Joseph, 2005. "From SO2 to Greenhouse Gases: Trends and Events Shaping Future Emissions Trading Programs in the United States," RFF Working Paper Series dp-05-20, Resources for the Future.
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    Cited by:

    1. Willett, Keith & Caplanova, Anetta, 2022. "Pollution and environmental quality violations: Finding the right emission permit prices for NO2 EDPs," Socio-Economic Planning Sciences, Elsevier, vol. 82(PB).
    2. Anetta Caplanova & Keith Willett, 2019. "Emission Discharge Permit Trading and Persistant Air Pollutants (A Common Pool Market Application with Health Risk Specifications)," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 25(1), pages 19-38, February.
    3. Joshua M. Duke & David M. Sassoon, 2017. "A classroom game on a negative externality correcting tax: Revenue return, regressivity, and the double dividend," The Journal of Economic Education, Taylor & Francis Journals, vol. 48(2), pages 65-73, April.
    4. Lynne Y. Lewis, 2011. "Environmental and Natural Resource Economics: Teaching the Non-Major and Major Simultaneously," Chapters, in: Gail M. Hoyt & KimMarie McGoldrick (ed.), International Handbook on Teaching and Learning Economics, chapter 46, Edward Elgar Publishing.
    5. Hultberg, Patrik T. & Udayanganie, Darshana, 2022. "Coordinating Environmental and Trade Policy to Protect the Environment: A Pedagogical Approach," Applied Economics Teaching Resources (AETR), Agricultural and Applied Economics Association, vol. 4(4), September.

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