1. Air pollution

2. Command and control 27,000 major sources of pollutants in US are subject to control Clean Air Act 1970; EPA created to oversee Describe C & C framework Is C & C framework efficient? Cost-effective?

3. C & C framework Establish ambient air quality standards  Legal ceiling on outdoor air concentration  Set according to health “threshold”  Protect the most sensitive members of popn States develop procedure / timetables for meeting standards EPA can halt federal funds to states if goals not met

4. Efficiency of C & C policy? Threshold concept  “margin of safety sufficiency high that no adverse effects would be suffered by any member of the population as long as the air quality is at least as good as that specified by the standards.” But adverse health effects are occurring at pollution levels lower than the ambient standard

5. Efficient level of standard Efficiency: set standard to max net benefit Problem is measuring benefits (damages avoided from higher standards) Efficient level hard to estimate with much confidence EPA study of Clean Air Act estimated benefits btw. $5 and $50 trillion

6. Uniformity (space) No account for number of people exposed Sensitivity of local ecology Costs of compliance in various areas Efficiency would dictate different standards in different areas Lots of inefficiencies in rural areas (low popn)

7. Timing of emission flows (time) Concentrations are important Standards based on averages Constant levels of control Efficiency would dictate:  Stringent control when meteorological conditions stagnant  Less so under normal conditions

8. Concentration vs. exposure Present standards defined in terms of concentration Health effects are related to human exposure to pollution  Determined by both concentration, space, and how much time spent in place On average, only 10% time spent outdoors Very little attention to indoor pollutants

9. Cost-effectiveness?

10. Innovative approaches Emissions trading  Initial allocation matters  Free vs. auction  EU experience Windfall profits to big polluters  RGGE in NW 2008 10 NE states; emissions capped starting 2009 Emission charges  Tax damage costs per unit  Double dividend