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Edited by Jeroen C.J.M. van den Bergh
Chapter 19: Lessons from Using Transferable Permits to Control Air Pollution in the United States
Tom Tietenberg 1. Introduction Beginning in 1975, burgeoning costs associated with the rigidities inherent in its traditional, predominantly legal approach to controlling air pollution led the US Environmental Protection Agency (EPA) to begin experimenting with a limited version of a system of transferable emission permits. Since that time the transferable emission permit concept has been applied in the US to the elimination of lead in gasoline, the reduction of ozone-depleting gases in accordance with the Montreal Protocol, the elimination of 10 million tons of SO, emissions in connection with a programme to reduce acid rain, the reduction of pollutants in the Los Angeles area and the retirement of highly polluting vehicles. It has been proposed as a means of achieving the goals of the Climate Change Convention both domestically and internationally. In this chapter I shall briefly describe these programmes and provide an overview of some of the major lessons we have learned about this approach. I 2. Pre-reform environmental policy Since the earliest reform policies were not only motivated by the inefficiencies associated with the traditional legal approach to air pollution control, but were also shaped by it, understanding that policy provides a foundation for understanding the evolution of the reforms. Stripped to its essentials, the US pre-reform approach to pollution control relied upon a ‘command-and-control’ approach to controlling pollution. Ambient standards, which establish the highest allowable concentration of the pollutant in the ambient air or water for each conventional pollutant, represent the environmental targets. To reach these targets,...
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