silly regulations - みる会図書館


検索対象: ENVIRONMENTAL ECONOMICS and POLICY
97件見つかりました。

1. ENVIRONMENTAL ECONOMICS and POLICY

392 劭叩 r 四 To 豆 cS ″房れ c れ d 〃Ⅳ s protecting workers from hazards in the workplace. The Act also created the National lnstitute for OccupationaI Safety and HeaIth (NIOSH), which, among its other responsibilities, must make recommendations for the OSHA regulatory standards. ln 1974 , OSHA promulgated the first regulation establishing levels of pollutants that would be acceptable in the workplace atmosphere. The statute required the standards tO be established at a level sufficiently stringent that no employee would suffer material impair- ment Of health, even if that employee were exposed tO the substance on a regular basis throughout his or her working life. ln addition, occupational standards requiring special pre- cautions and/or protective devices have been adopted or proposed for a number Of workplace contaminants. Carcinogens are handled more severely. ()nce any substance iS confirmed as a carcinogen, ambient workplace standards are set, r 叩 idly followed by the imposition Of special handling requirements, protective devices, and minlmum-contact regulations. The approach taken by OSHA was tO specify, often in excruciating detail, acceptable con- taminant levels, as well as the approaches tO be taken by employers tO ensure the attainment Of those contaminant levels. 17 ln response tO adverse public opinion about silly regulations, in 1978 OSHA revoked 928 previously promulgated regulations as unnecessary. Federal Environmental Pesticide Control Act. This 1972 act amended the Federal lnsecti- cide, Fungicide, and R0denticide Act. (Congress has a flair for titles!) The thrust 0f the legisla- tion is t0 provide for the registration Of all pesticides, the certification Of individuals applying these pesticides, and the premarket testing 0f all new pesticides. AII pesticide registrations automatically expire every five years. TO secure a new registra- tion, the manufacturer must prove that the benefits derived from that pesticide will out- weigh its social costs. When the evidence permits, the EPA has the power tO prohibit the sale 0f a pesticide or t0 restrict its use t0 specific applications. The EPA has used this power t0 dramatically decrease the use 0f a number 0f pesticides, with DDT being the earliest and most publicized example. Certification procedures for individuals applying the pesticides represent a recognition that the danger posed depends to a large extent on how the substances are applied. With this procedure, the EPA can ensure proper training for commercial applicators, and, by threaten- ing the withdrawal of certification (and the livelihood of the applicators), the EPA can influ- ence their behavior. Resource Consewation and Recovety Act. TO counteract the unsafe dumping of toxic wastes, Congress passed SubtitIe C of the Resource Conservation and Recovery Act of 1976. This act imposes standards for handling, shipping, and disposing of toxic wastes. The regulations implementing this act define hazardous waste and establish a cradle-to- grave management system, including standards for generators Of hazardous wastes, standards 17The humor in the situation was nicely illustrated by an ad for a political candidate opposed to ()SHA. A cowboy is pictured riding Off tO the prairie. On the back of his horse is strapped a plastic toilet required by an ()SHA regulation setting the maximum distance any employee could be from a comfort station.

2. ENVIRONMENTAL ECONOMICS and POLICY

414 劭叩 20 D el 叩襯 e れ 4 P 催イ 2 E れ ro れ襯ー 20.2 JOBS VERSUS THE ENVIRONMENT: WHAT IS THE EVIDENCE? The employment effects 0f environmental regulation are a h0t POlitical t0Pic. Public OPinion surveys shOW strong support for measures intended tO produce a cleaner environment' but workers Often feel that these measures threaten their j0bs. ls their anxiety justified? Theory tells us that regulation can reduce employment bY raising marginal COStS and decreasing sales; it alSO tells us that enVirOnmental can increase employment by creating a demand for workers tO monitor and maintain pollution control equip- ment. HOW important are these conflicting tendencies? One particularly interesting way t0 gather evidence on this subject would be tO examine the employment consequences Of regulation in a geographic area that has experienced particularly stringent regulation. One study that did precisely that focused on the regulation 0f air pollution in manufacturing plants in the LOS Angeles region. Because this area has some 0f the worst air quality in the nation, the south coast Air QualitY Management District has been forced t0 adopt regulations Of unprecedented stringency tO comply with national air quality standards. The study examines employment growth in the LOS Angeles region in plants subject tO these regula- tions, and compares growth at these plants tO employment growth at similar plants in Texas and Louisiana, areas that had no significant increase in local air quality regulation. The results indicate that in the 1979 ー 91 peri0d in the Los Angeles Basin increases in air quality regulation involving substantial increases in cost did not appreciably affect employment. ln fact, the study found very small increases in employment. Although the increases were not statistically significant, they were sufficient t0 rule out the possibility that the regulation had led tO large decreases in employment. source: Eli Berman and Linda T. M. Bui, "Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin, ”面″m記砿乃″ cEC0 れ om 79 (February 2001 ) : 265 ー 95. However, this generally positive prognosis for the impact Of environmental POlicy on employment should not obscure the problems. Gains in employment generally benefit a differ- ent set 0f workers than losses dO. New jObs are rarely in the same location as those lost and, as Haveman points out, rarely involve the same skilllevels. Even when overall employment effects are positive, the rising COStS Of environmental cause severe localized problems. HOW much responsibility for the slowdown in productivity can be attributed tO environ- mental policy? Using comparative data from the United States, Canada, and the former West Germany, Conrad and Morrison found that only a small part was the result Of diverting invest- ments toward environmental control.6 ln fact, some government requirements tO install 6KIause Conrad and Catherine Morrison, "The lmpact 0f P011ution Abatement lnvestment on Productivity Change: An Empirical Comparison 0f the United States, Germany and Canada, ” SO ″ em ECO れ 0 襯た面″ m 記 55 (January 1989 ) : 684 ー 698.

3. ENVIRONMENTAL ECONOMICS and POLICY

440 劭叩 r 27 The Q for S 加 D eli 叩襯ー the sustainability criterion has been the exception, not the rule. Capital accumulation and technological progress have expanded the ways in which resources can be used and have increased subsequent welfare levels—in spite Of a declining resource base. Nonetheless' the 朝 0 criteria are not inevitably compatible. resource bases diminish and glObal externalities increase, the conflict can be expected tO become intense. ◆ TRADE AND THE ENVIRONMENT One of the traditional paths tO devel 叩 ment involves 叩 ening up the economy tO trade. Freer international markets provide lower prices for consumer goods (because Of competition from foreign producers) and the 叩 portunity for domestic producers tO exploit foreign markets. Recently, however, concerns have been raised about the environmental consequences Of pro- moting a freer flOW Of capital and products across international borders. Prominent among these fears is the "pollution havens" hypothesis. According tO the pollution havens hypothesis StriCter envlronmental regulations in one country either encourages domestic prOdUCtiOn facil- ities tO move tO countries With less stringent environmental regulations encourages increas- ing imports from those countries. TO the extent the pollution havens hypothesis is valid' it provides a reason for local areas tO accept lower environmental standards as a means Of prOteCt- ing the j0bs that would be lost if production moved t0 countries with less stringent regulations. What is the evidence? Dean surveys a very large number Of studies and finds absolutely no SUPP0rt for the pollution havens hypothesis. 9 Another survey reaches the same conclusion in terms Of the effects Of environmental regulations on U. S. competitiveness. 10 Actually, these results should not be surprising. Because pollution control costs constitute a relatively small part 0f the costs Of production, it would be surprising if they were a major determinant Of either firm-location decisions or the direction Of trade. A distinctly different point 0f view has been articulated by Michael Porter. 11 NOW known as the "Porter hypothesis," this view suggests that firms in areas with the most stringent reg- ulations derive a competitive 市れ ge rather than a competitive disadvantage. Under this view, StriCt environmental regulations force firms tO innovate, and innovative firms are more competitive. This advantage is particularly pronounced for firms that produce pollution con- trol equipment (which can then be exported tO firms in Other countries, subsequently raising their environmental standards), but it might also be present for firms that, when forced t0 change their production processes, find that their costs are lower, not higher. Some instances Of regulation-induced lower production costs have been recorded in the literature12, but few studies have attempted tO examine the Porter hypothesis in its entirety. 9Judith M. Dean, "Trade and the Environment: A Survey of the Literature," in Patrick Low, ed. , 加われ記 Trade and 2 Env 0 れ襯例 / (Washington, DC: World Bank, 1992 ) : 15 ー 28. 10Adam B. Jaffe et al., "EnvironmentaI ReguIation and the Competitiveness of U. S. Manufacturing: What Does the Evi- dence Tell Us?, ”面 4 記砿 ECO れ 0 襯たん″ e 33 , NO. 1 ( 1995 ) : 132 ー 163. 11Michael E. Porter and Claas van der Linde, "Toward a New Conception of the Environment-Competitiveness Rela- tionship, ” Joumal 矼 ECO れ 0 襯た Perspectives 9 , NO. 4 ( 1995 ) : 97 ー 118. 12Anthony J. Barbera and Virginia D. McConneII, "The lmpact of Environmental Regulations on lndustry productiv- ity: Direct and lndirect Effects," JO ″ rn 砿 E れ ro れ襯ー ECO れ 0 襯 / cs れ M ロれ ge 襯ー 18 ( 1990 ) : 50 ー 65.

4. ENVIRONMENTAL ECONOMICS and POLICY

298 劭叩 / 邵 75 c R ロ加の滬盥 mo ん催た川 0 市〃 c わ TRADABLE PERMITS FOR OZONE-DEPLETING CHEMICALS On 12 August 1988 the U. S. EnvironmentaI Protection Agency issued its first regulations imple- menting a tradeable permit system tO achieve the targeted reductions in ozone-depleting substances. According tO these regulations, all maJOr U. S. producers and consumers Of the con- trolled substances were allocated baseline production or consumption allowances using 1986 levels as the basis for the proration. Each producer and consumer was allowed 100 percent 0f this baseline allowance initially, with smaller allowances being granted after predefined dead- lines. FoIIowing the London conference, these percent-of-baseline allocations were reduced in order to reflect the new, earlier deadlines and lower limits. These allowances are transferable within producer and consumer categories, and allowances can be transferred across international borders tO producers in 0ther signatory nations if the transaction is approved by EPA and results in the appropriate adjustments in the buyer or seller allowances in their respective countries. Production allowances can be augmented by demon- strating the safe destruction Of an equivalent amount Of controlled substances by an 叩 proved means. Some interpollutant trading is even possible within categories 0f pollutants. (The cate- gories are defined SO as tO group pollutants with similar environmental effects. ) All information on trades is confidential (known only t0 the traders and the regulators) SO that it is difficult t0 know hOW effective this program has been. Since the demand for these allowances IS quite inelastic, supply restrictions increase revenue. Because 0f the allocation of allowances tO the seven major domestic producers 0f CFCS and halons, the EPA was concerned that its regulation would result in sizeable windfall profits (estimated to be in the billions of dollars) for those producers. The EPA handled this problem by imposing a tax on production in order tO "soak up" the rents created by the regulation-induced scarcity. This 叩 plication was unique in 朝 0 senses. lt not only allowed international trading of allowances, but it involved the simultaneous application Of permit and tax systems. Taxes on production, when coupled with allowances, have the effect 0f lowering permit prices. The com- bined policy, however, is no less cost effective than permits would be by themselves, and it does allow the government tO acquire some Of the rent that would otherwise go tO permit holders. Source: Tom Tietenberg, "Design Lessons from Existing A1r PoIIution Control Systems: The United States, ” in S. Hanna and M. Munasinghe, eds. , 叩邵 R んな加ロ Social dEco んグ Co 既た Case S ル市イ D れ〃〃″われ s (Washing- ton, DC: WorId Bank, 1995 ) : 15 ー 32. attribute this tO the fact that other studies fail to include all the possible adaptation strate- gies farmers could employ. Others, with a more global focus, are less optimistic. Rosenzweig and parry, for example, conclude that, although ad 叩 tability may be high in the industrialized countries, the limited opportunities for farmers in developing countries mean that they are likely to bear the brunt

5. ENVIRONMENTAL ECONOMICS and POLICY

ル″″ To R な 229 Were these policies efficient? They were not and would not have been even had they resulted in the efficient catch! This statement may seem inconsistent, but it is not. Efficiency implies both that the catch much be at the efficient level and that it must also be extracted at the lowest possible cost. This latter condition was violated by these policies (see Figure 12.3 ). ln Figure 12.3 are reflected the total cost in an efficient allocation (TCI) and the total cost after these policies were imposed (TC2). The net benefit received from an efficient policy is shown graphically as the vertical distance between total cost and total benefit. After the P01- icy, however, the net benefit was reduced to zero; the net benefit (represented by vertical dis- tance) was lost tO society. Why? The net benefit was wasted because of the use of excessively expensive means to catch the desired yield of fish. Traps would reduce the cost of catching the desired number of fish, but traps were prohibited, SO that larger expenditures on capital and labor were required to catch the same number Of fish. This additional capital and labor represents one source of the waste. The limitations on fishing times had a similar effect on cost. Rather than allowing fisher- men tO spread their effort out over time so that the boats and equipment could be more pro- ductively utilized, fishermen were forced to buy larger boats that would allow them to take as much fish as possible during the shorter seasons. 12 Significant overcapitalization resulted. Regulation imposed Other costs as well. lt was soon discovered that, although the preced- ing regulations were adequate tO protect the depletion of the fish population, t い y -. ーり no effect on the incentive forändividual fishermen to increase their share of the take. Even though the profits would be small because of high costs, new technological changes would allow those who adopted them to increase their share of the market and put others out of business. TO protect themselves, the fishermen were successful in introducing bans on new technology. These restrictions took various forms, but two seem particularly noteworthy. The first was the banning of the use of thin-strandednonofilament net. The coarse-stranded net it would have reOIacedÄÅ'@ViSiblé・朝-朝ぎ-燾i羸Jn in the daytime and therefore could be avoided by them. As a result, it was useful only at night. By contrast, the thinner monqfilament nets could be successfully used even during the daylight hours. The monofilamenf nets were banned in both Canada and the United States soon after they appeared. The most flagrantly inefficient regulation was one in Alaska that barred gill-netters in BristoI Bay from using engines to propel their boats. This regulation lasted until the 1950S and heightened the public's awareness Of the anachronistic nature of this regulatory approach. The world's most technologically advanced nation was reaping its harvest from the Bering Sea in sailboats while the rest Of the world—particularly Japan and the Soviet Union—was mod- ernizing its fishing fleets at a torriü pace! Time-restriction regulations had a similar effect. Limiting fishing time provides an incen- tive tO use that time as intensively as possible. Huge boats facilitate large harvests within the periOd and therefore are attractive, but they are very inefficient: The same harvest could have been achieved with fewer, smaller boats used tO their optimum capacity. Guided by a narrow focus on the maximum sustainable yield that ignored costs, these policies led tO a substantial loss in the net benefit received from the fishery. COSts are an 121n one extreme example, the 1982 herring season in Prince William Soundlasted only four hours, and the catch still exceeded the area quota. This case is described in C. V. Tillion, "Fisheries Management in Alaska," Papers 怦 2 れイ the E. ゆ 2 CO リ″ 0 れ 0 れ the e 面 c ″ 0 れ砿 F なん E 伊なん〃 0 0 記″の , FAO Fisheries Report 298 , Supple- ment 3 , (Rome: FOOd and Agriculture ()rganization, 1985 ) : 291 ー 97. 0. 人 0

6. ENVIRONMENTAL ECONOMICS and POLICY

The Growth 片 oce 415 cleaner equipment may have raised productivity by forcing firms tO invest in newer and more efficient equipment. For industries in the United States, a common finding seems to be that somewhere in the neighborhood 0f 12 percent 0f the responsibility 0f the productivity slow- down can be attributed tO environmental regulations. 7 If these conclusions are at all accurate, environmental policy does not bear responsibility for much Of the decline in the economic growth rate in the late 1970S. Energy A second possible source Of growth drag iS energy. Because large price increases occurred during 1973 ー 1974 , this period provides a unique opportunity tO study the magnitude 0f the growth-inhibiting effects of energy. What should we expect to find? Because energy and c 叩 ital historically have been comple- ments, we should find that price increases would slow down capital formation. At the same time, the fact that energy and labor are substitutes would suggest that the use of labor should be rising, which, in turn, would cause the average productivity Of labor t0 fall. On a generallevel, the evidence is consistent with this set Of expectations. lnvestment is lower, and the average productivity of labor has fallen. Work by Jorgenson and others, such as Uri and Hassanein, confirms thiS impression. 8 Focusing on the period 1973 ー 1976 , a time characterized by rapidly increasing energy prices, Jorgenson first examined the question Of whether the decline in growth was due tO declines in input growth or tO declines in productiyity. He found that input declines were much less significant than declines in productivity. He then attempted tO discover the sources Of this productivity decline by looking at the specific experience Of 35 differ- ent industries. Though a decline in economywide productivity could conceivably be caused either by a shift in resources from high-productivity industries tO low-productivity industries or by a decline in productivity within each industry, Jorgenson found the latter tO be far more important than the former. His analysis 0f the causes 0f these declines revealed that, in 29 0f the 35 sec- tors examined, technological change was biased toward the use 0f energy. This result suggests that from 1973 to 1976 , productivity growth resulting from technological progress declined as energy prices rose. One puzzle tO be explained by those whO believe energy prices have already played a sig- nificant role in productivity declines is hOW that could be SO when the energy cost share is SO small. Factors with small cost shares should, in general, have rather small effects on output. 7Anthony J. Barbera and Virginia D. McConnell, "The lmpact 0f Environmental Regulations on lndustry Productivity: Direct and lndirect Effects," 面レ rn 記砿 E れ h0 れ m 例 I ECO れ 0 襯 / イれロ ge 襯例ー 18 (January 1990 ) : 50 ー 65 ; wayne B. Gray, "The COSt 0f Regulation: OSHA, EPA' and the ProductivitY Slowdowm" 襯たロれ ECO れ 0 襯た R 77 (December 1987 ) : 998 ー 1006 ; Gregory B. Christiansen and R0bert H. Haveman' "The Contribution 0f Environmen- Regulations t0 the Slowdown in productivity Growth"' 面 m 記砿 E れ耘 0 れ襯例 I ECO れ 0 襯 / d ロれ e 襯 e 8 ( 1981 ) : 381 ー 390 ; and J. R. Norsworthy, Michael J. Harper, and Kent Kunze, "The Slowdown in ProductivitY Growth: Analysis 0f Some Contributing Factors," Br00 ん加の Papers 加 ECO れ 0 襯た c ″彑 ( 2 , 1979 ) : 387721. 8Dale W. Jorgenson, "Energy prices and productivity Growth," Sca れ市れⅵ面″ m 記砿 ECO れ 0 襯 ~ 83 ( 1981 ) : 165 ー 179 ; Noel D. Uri and Saad A. Hassanein, "Energy prices, Labour ProductivitY' and Causality: An Empirical Exam- ination," E れ 44 ECO れ 0 襯 / 4 (April 1982 ) : 98 ー 104.

7. ENVIRONMENTAL ECONOMICS and POLICY

Co れれ″ 0 れ記 PO ″″れな 269 TABLE 14.2 Empirical Studies Of Air Pollution ControI Hahn and Noll ( 1982 ) Krupnick ( 1983 ) Seskin, Anderson, and Reid ( 1983 ) McGartland ( 1984 ) Spofford ( 1984 ) S ルイ Atkinson and Lewis ( 1974 ) Roach et al. ( 1981 ) MaI oney and YandIe ( 1984 ) O'Ryan ( 1995 ) CAC PER = Po ″レれな Co 怩イ Particulates Sulfates Nitrogen dioxide Nitrogen dioxide Particulates Sulfur dioxide Particulates Hydrocarbons Parti culates Sulfur dioxide Geo 叩ん c St. Louis metropolitan area Four Corners in Utah, Colorado, Arizona, and New Mexico Los Angel es standards Balti more regulations Chicago Baltimore Lower Delaware Valley Lower Delaware Valley AII domestic Du Pont plants Santiago, Chil e CAC 召例 ch 襯ん SIP regulations SIP regulations Uniform percentage reduction Uniform percentage reduction Uniform percentage reduction PER/APS California emlss 10n Proposed RACT Pr 叩 osed RACT regulations SIP regulations ホ襯 ed P んれ / NonuniformIy mixed Nonuniformly mixed Nonuniformly mixed Nonuniformly mixed NonuniformIy mixed Nonuniformly mixed Nonuniformly mixed Nonuniformly mixed Uniformly mixed Nonuniformly mixed CAC Co 立ね ん立 Co 立 6.00 4.25 1.07 5.96 14.40 4.18 1.78 22.00 4.15 1.31 Definitions: APS = Ambient permit system SIP = State implementation plan Percentage emisson reducti on = Command and control, the traditional regulatory 叩 proach tO pursue cost-effective allocations Of control responsibility. its approach tO a CAC strategy because Of bOth the amount Of resources at its disposal and its inclination to use them get in part tO promulgate cost-effective emission standards. Therefore' this board may be atypically cost effective in 9Hahn and NOII also suggest that the california Air Resources Board has specifically used its multimillion-dollar bud- gency Of the ambient standard being met? The evidence seems tO suggest that it does depend Does the degree Of cost excess associated with the CAC approach depend on the strin- economically feasible. AII POlicies must ultimately arrive at this allocation. 9 a very high degree Of control. ln effect, virtually every source is forced t0 control as much as is The city studied by Hahn and NOII, LOS Angeles' has a large sulfate problem necessitating jecting it tO close scrutiny. about the conditions under which CAC policies may not be far Off the mark' it is worth sub- nonattainment areas RACT = Reasonably available control technologies, a set Of standards imposed on existing sources in

8. ENVIRONMENTAL ECONOMICS and POLICY

Ⅳル I G . ・怦た e Co れ〃 0 な 133 According tO depletable resource models, 0 ⅱ and natural gas would be transition fuels in an efficient allocation. They would be used until the marginalcost of further use exceeded the marginal cost Of substitute resources—either more abundant depletable resources, such as coal, or renewable sources, such as solar energy. 2 ln an efficient market path, the transition tO these alternative sources would be smooth and harmonious. Have the allocations of the last several decades been efficient or not? ln a 1977 speech to the nation, U. S. President Jimmy Carter suggested that the resolve needed tO solve our energy problems was "the moral equivalent Of war. ” The existence Of a cri- sis atmosphere suggests that the allocations have not been efficient. Why not? ls the market mechanism flawed in its allocation 0f depletable recyclable resources? If so, is the flaw fatal? If not, what caused the inefficient allocations? ls the problem correctable? ln this ch 叩 ter we shall examine some Of the major issues associated with the allocation Of energy resources over time and see hOW economic analysis can clarify our understanding Of both the sources of the problems and their solution. Because energy is tOO complex a subject tO treat comprehensively in one ch 叩 ter, however, additional references are provided. ◆ NATURAL GAS: PRICE CONTROLS ln the United States during the winter of late 1974 and early 1975 , serious shortages 0f nat- ural gas developed. Customers whO had contracted and were willing tO pay for natural gas were unable t0 get as much as they wanted. The shortage ()r c レ″襯 e れ一 as the Federal Energy ReguIatory Commission calls (t) amounted t0 2.0 trillion cubic feet 0f natural gas in 1974 ー 1975 , which represented roughly 10 percent of the marketed production in 1975. ln an efficient allocation, shortages 0f that magnitude would never have happened. WhY did they? The source Of the problem can be traced directly tO government controls over natural gas prices. This story begins, 0ddly enough, with the rise 0f the automobile, which traditionally has not used natural gas as a fuel. The increasing importance Of the automobile for transportation created a rising demand for gasoline, WhiCh in turn stimulated a search for new sources Of crude 0il. This exploration activity uncovered large quantities 0f natural gas (known as c dg ) , in addition tO large quantities Of crude Oil, which was the object 0f the search. AS natural gas was discovered, it replaced manufactured gas—and some coal—as an energy source in the geogr 叩 hic areas where it was found. Then, as a geogr 叩 hically dispersed demand developed for this increasingly available gas, a long-distance system 0f gas pipelines was designed and constructed. ln the period following World War Ⅱ , natural gas became an important source Of energy for the United States. The regulation 0f natural gas began in 1938 with the passage 0f the Natural Gas Act. This act transformed the Federal power Commission (FPC) into a federal regulatory agency charged with maintaining 'just" prices. ln 1954 , a Supreme Court decision in Phillips Petro- leum CO. v. Ⅳな CO 加 forced the FPC t0 extend its price control regulations tO the producers. prior to that time, it had merely limited its regulation tO pipeline companies. Because the process Of setting price ceilings proved cumbersome' the hastily conceived initial ("interim") ceilings remained in effect for almost a decade before the commission was able tO impose more carefully considered ceilings. What was the effect 0f this regulation? 2When used for Other purposes, 0 ⅱ can be recycled. waste lubricating 0i1 is now routinely recycled.

9. ENVIRONMENTAL ECONOMICS and POLICY

Po 秬ん r 襯 s 329 for heavily polluting vehicles that are removed from service. ln one version of the program, heavily polluting vehicles are identified either by inspection and maintenance programs or remote sensing. A vehicle owner can bring his or her vehicle up tO code, usually an expen- sive proposition, or can sell it tO the company running the cash for clunkers program. Purchased vehicles are usually disassembled for parts and the remainder of the hulk is recy- cled. The number of ERCs earned by the company running the program depends on such factors as the remaining useful life of the car and the estimated number of miles it would be driven, and this number is generally controlled so that the transaction results in a net increase in air quality. Retirement strategies would tend to counteract the tendency for vehicles to be used longer as a result Of the new-source focus Of current automotive regulations. By eliminat- ing these heavily polluting vehicles from the fleet earlier than would otherwise be the case, greater emission reductions could be achieved at an earlier date. This approach could be applied selectively in those local areas for which it could make a significant difference. We also have learned some things about what doesn't work very well. One increasingly common strategy involves limiting the days any particular vehicle can be used in order tO limit miles traveled. As ExampIe 16.6 indicates, this strategy can backfire! COUNTERPRODUCTIVE POLICY DESIGN AS one response tO unacceptably high levels Of traffic congestion and air pollution, the Mexico City administration imposed a regulation that banned each car from driving on a specific day Of the week. The specific day when a given car could not be driven was determined by the last digit Of the license plate. This approach appeared to offer the opportunity for considerable reductions in congestion and air pollution, at a relatively IOW cost. ln this case, however, the 叩 pearance was deceptive, because 0f the way in which the population reacted t0 the ban. An evaluation 0f the program by the World Bank found that, in the short run, the regula- tion was effective. B0th pollution and congestion were reduced. However, in the long run the regulation was not only ineffective, it was counterproductive (paradoxically, it increased the level of congestion and pollution). The paradox resulted because a large number Of residents reacted by buying an additional car (which would have a different license plate number and, therefore, be banned on a different day). Once the additional cars became available, total driving lncreased. Policies that are overly quick tO anticipate and incorporate behavioral reactions run the risk that actual and expected outcomes may diverge considerably. Source: Gunnar S. Eskeland and Tarhan Feyzioglu, "Rationing Can Backfire: The 'Day Without a Car Program' in MexiC0 City," WorId Bank POIicy Research Working P 叩 er 1554 (December 1995 ).

10. ENVIRONMENTAL ECONOMICS and POLICY

れ ECO れ om た Po ″″ c 記ホ s 5 襯 e 325 cost-benefit analysis of their expected impact. The analysis concluded that the proposed 0.01 gplg standard would result in $ 36 billion ()n 1983 dollars) in benefits (from reduced adverse health effects), at an estimated cost to the refining industry of $ 2.6 billion. AIthough the regulation was unquestionably justified on efficiency grounds, the EPA wanted tO allow flexibility in how the deadlines were met, without increasing the amount of lead used. AIthough some refiners could meet early deadlines with ease, others could do so only with a significant increase in cost. Recognizing that meeting the goal did not require that every refiner meet every deadline, the EPA initiated an innovative program to provide additional flexibility in meeting the regulations (Example 16.4 ). The program was very successful in reducing both lead emissions and the concentration 0f lead in the ambient air. From 1982 ー 2001 , emissions of lead decreased by 93 percent and the concentrations in the ambient air fell by 94 percent. Lessons from Theory and Practice, ” EC0わ0彑ん盟 Q ″邵 16 ( 1989 ) : 361706. nomic CO- 叩 eration and Development, 1992 ) : 21 ー 34 ; and R0bert W. Hahn and Gordon L. Hester, "Marketable Permits: T. Jones and J. Corfee-Morlot, eds. C ″ m 2 劭れ 4 De 豆加 0 Tra 施た R の初″ S. 襯 , (Paris: Organization for Eco- Sources: Nussbaum, Barry D. , "Phasing Down Lead in Gas01ine in the U. S. : Mandates, lncentives, Trading and Banking ” in scheduled on 31 December 1987. means Of facilitating the transition tO this new regime, the lead-banking program ended as deadlines in court, the traditional response, became unnecessary. Designed purely as a the deadlines, even in the face of equipment failures or "Acts of God"; furthermore, fighting the up rights for sale. Acquiring these credits made it possible for other refiners tO comply with Refiners had an incentive to eliminate the lead quickly, because early reductions freed banking was allowed. 1987. Prices of rights, which were initially about 0.75 cents per gram of lead, rose to 4 cents after rights could be used in that period or any subsequent period up to the end of the program in same quarter), but the EPA subsequently allowed banking. Once banking was initiated, created lnitially, no banking of rights was allowed (). e. , rights had to be created and used in the could sell their rights to other refiners. issued rights declined over time. Refiners who did not need their full share of authorized rights ated in order t0 take advantage Of the program, but their impact was very small. ) The number of ies. (Because Of a loophole in the regulations, some new "alcohol-blender" refineries were cre- amount 0f lead in gasoline produced during the period) were allocated to the 195 or so refiner- Under the 加 d eo 怦四 ra 襯 a fixed number of "lead rights" (authorizing the use of a fixed GETTING THE LEAD OUT: THE LEAD PHASEOUT PROGRAM