| Abstract: | Emerging flaws in existing air quality policies and changing air quality objectives are being addressed with piecemeal modifications. The evolving policy combines a command and control (CaC) core with add-on opportunities to trade pollution control responsibilities based on economic incentives. While the add-ons have greatly improved air quality policies, retention of the CaC core means that we are still paying far too much for air quality that is still unacceptable. Specific reasons why a CaC core limits emissions trading and reduces economic efficiency are discussed. They include: (1) the arbitrary and irrelevant nature of CaC-based assignment of pollution control responsibility to firms; (2) trading limits for emissions offsets in ‘non-attainment areas’; (3) all-ornothing deadlines that have been extended three times; (4) sunk costs as a barrier to innovation; (5) the illusion that a CaC-based policy has lower inventory and monitoring costs. The conclusion is that there will be a big difference between the performance of the existing policy, even with some additional modifications, and the kind of market incentives-based policies advocated by economists. Economists' proposals are now before Congress in congressionally sponsored studies. Reauthorization of the Clean Air Act, in some form, is expected this congressional session. |
