The temporal efficiency of SO₂ emissions trading
Name
2002-003.pdf
Size
364.76 KB
Format
Adobe PDF
Checksum (MD5)
054913c84b651637a87e6f5b4e51c6d3
Author(s)
Ellerman, A. Denny
Montero, Juan-Pablo
Date Issued
2002
Publisher
MIT Center for Energy and Environmental Policy Research
Series/Report no.
MIT-CEEPR (Series) ; 02-003WP.
Abstract
This paper provides an empirical evaluation of the temporal efficiency of the U.S. Acid Rain Program, which implemented a nationwide market for trading and banking sulfur dioxide (SO2) emission allowances. We first develop a model of efficient banking and select appropriate parameter values. Then, we use aggregate data from the first seven years of the Acid Rain Program, to assess the temporal efficiency of the observed banking behavior. We find that banking has been surprisingly efficient and we discuss why this finding disagrees with the common perception of excessive banking in this program.
Subjects
Sulphur dioxide
Emissions trading
Acid rain
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