Command And Control Strategies The Case of Standards

Command And Control Strategies: The Case of Standards Lecture 18

• CAC rely on standards and compliance costs • Standard is a mandated level of performance that is enforced in law If you want people not to do something, simply pass a law that makes it illegal and then send out the authorities to enforce the law Compliance Costs of meeting the standard

• Types of standards – Ambient Standards – Emissions Standards – Technology Standards • Ambient Standard – Qualitative dimensions of the surrounding environment – For example, required Dissolved Oxygen in a River

• An upper limit for the pollutant is set and is expressed in average concentration over some period of time, for e. g. SO 2 annual average of 80 μg/m 3 over a particular area • Emissions Standards – Upper limit on quantity of emissions coming from different pollution sources tons / week or average residual flows/year – Link between emissions and ambient quality? – Is meeting emission standard a prerequisite to meeting ambient standard or vice versa?

• Environment usually transfers pollutants from one region to another • Hydrological and meteorological studies of the environmental media • Chemical process in environmental media renders some pollutants harmless • Also affected by human decisions • Performance standards include emission standard and other types such as workplace standards

• Technological standard – Techniques or practices potential polluters must adopt. – For example, all cars be equipped with catalytic converters • Distinction between performance standard and technology standard • Standards appear to give regulators a degree of positive control to get pollution reduced; but the process is complicated

• Setting the level of standard An implicit trade-off: Temporary deteriorate environmental quality and damage it today Incurring long-run high abatement costs to meet ambient quality standards Zero-risk approach

• Uniformity of Standards Policy trade-off: Applied to heterogeneous situations, more efficient would be the impact More costly will it be to gather the required information and make MD and MAC functions

• Standards and the equimarginal principle – There are multiple emissions sources producing the same effluent, EMP must hold!

• To summarize: – The greater the difference between marginal abatement costs and marginal damages, the worse will be the performance of equal-standard approach – Pollutants are in fact emitted by many sources, and setting different standards for different sources would only be possible if – “Public agency knows the MAC functions for each of these resources”

• Incentives Aspect of the Standards – In technology standard, polluters are dictated various operating practices – Reduce the incentive of polluters to find costeffective solutions to emissions reduction – You meet the standard or you don’t meet that level! Perverse Incentives Technology forcing and pollution control industry

• The Economics of Enforcement – Pollution-control laws are not enough – Accompanied by efficient enforcement machinery – Various resources that have opportunity costs – Lower e would require less enforcement but the standard might be efficiently achieved!

• Other factors affecting the enforcement costs – Budget constraint – Nature and amount of penalties – Number of polluters – US: Self-monitoring book-keeping of the emissions hourly rate of flow – Periodic auditing or random visits lower this visit rate, lower will be the extent of compliance – Enforcement carried out by local agencies; how devoted and sincere are they? – Initial compliance and continued compliance • Implicit trade-off?