Enforcing Emissions Trading Programs

Theory, Practice, and Performance

Authors

  • John K. Stranlund,

    1. John K. Stranlund is an associate professor in the Department of Resource Economics at the University of Massachusetts-Amherst. Most of his research is focused on the economic theory of environmental policy.
    Search for more papers by this author
  • Carlos A. Chavez,

    1. Carlos A. Chavez is an assistant professor in the Department of Economics at the Universidad de Concepcion, Chile. He received his master's degree from Georgetown University and his doctorate from the University of Massachusetts at Amherst. His research is focused on the theory and practice of enforcing market-based environmental policies.
    Search for more papers by this author
  • Barry C. Field

    1. Barry C. Field is a professor of resource economics at the University of Massachusetts-Amherst. He has worked in the areas of natural resource scarcity, land use policy, energy economics, and property rights economics. He is the author of two popular textbooks Environmental Economics: An Introduction and Natural Resource Economics: An Introduction.
    Search for more papers by this author

Abstract

Combining an analysis of the compliance incentives faced by firms in an emissions trading program, a comprehensive review of the enforcement strategies employed in Sulfur Dioxide Allowance and the Regional Clean Air Incentives Market (RECLAIM) programs, and a review of the compliance performance of these programs thus far, we are able to propose several practical guidelines for enforcing emissions trading programs. We stress the importance of prevailing market prices for emissions permits in determining compliance incentives, the importance of accurately measuring firms' emissions, and the importance of implementing enforcement strategies that remove the incentives firms may have to falsify emissions reports.

Ancillary