A market-based environmental policy experiment in Chile
Name
2000-005.pdf
Size
114.02 KB
Format
Adobe PDF
Checksum (MD5)
e19ddcfa17a68d1c686a3e2457e5231d
Author(s)
Montero, Juan-Pablo
Katz, Ricardo Santiago
Sánchez, José Miguel
Date Issued
2000
Publisher
MIT Center for Energy and Environmental Policy Research
Series/Report no.
MIT-CEEPR (Series) ; 00-005WP.
Abstract
Despite growing interest in the use of emissions trading for pollution control, empirical evidence for this regulatory instrument has been confined to a few experiences in the United States. This paper broadens the empirical base by examining the "Emission-Offsets Trading Program" that has been in place since 1992 to control airborne particulate emissions in Santiago, Chile. While the program is doing well from an environmental perspective, due in part to the price-based introduction of natural gas, the market is performing poorly because of high transaction costs, uncertainty, and poor enforcement. However, the scarcity rents created by allocating grandfathered emission rights to incumbents have proved to be a very effective tool for completing the emissions inventory.
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