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Clearing the fog about the impacts of emissions trading

In March 2010, southern Wisconsin had the worst particulate air pollution in the nation, and many counties in the southern part of the state routinely exceed the national standard for ozone concentrations. “Wisconsin is unique in that that much industrial activity in the state is centered in small towns or rural areas (such as Wausau or the Fox River Valley) and not necessarily in large urban centers,” notes Corbett Grainger, who has launched a new project to learn more about the impacts of clean air regulations, especially emissions trading.

He will track changes in the spatial distribution of air pollutants that result from industries selling their pollution allocations to those firms that find it more expensive to reduce their emissions. “It’s likely that cap-and-trade programs will continue to proliferate, so it’s important to understand how such policies affect different stakeholders in Wisconsin and elsewhere,” says Grainger.

Market-based efforts to reduce pollution — such as emissions trading — have long been criticized by members of the “environmental justice” movement and others because of concerns that uneven distribution of pollution adversely affects disadvantaged communities. For example, such concerns delayed California from implementing a statewide cap-and-trade program.

Corbett Grainger

Grainger’s current project builds on his earlier work studying the distributional effects of such diverse topics as fisheries management, air quality in housing markets, and political re-districting.

Because greenhouse gases like carbon dioxide are often emitted jointly with other pollutants, some benefits of emissions mitigation come from health impacts of co-pollutants. “In the case of climate change, the source of carbon emissions is less important, because those gases combine globally to cause climate change. For other pollutants like particulates, the source and transport is critical because of effects on human health,” Grainger explains. “The fact that co-pollutants are emitted with carbon makes the distributional impacts of carbon markets more complicated.”

He proposes to combine emissions data with demographic data and models of atmospheric pollutant transport to examine the impact of carbon trading on final exposure to air pollution. The analysis will attempt to find whether emissions trading has led to relative co-pollutant hotspots and, if so, which populations are vulnerable to these changes.

“What remains to be seen is whether pollution reductions and final exposure will differently affect rural or urban, poor or rich areas,” Grainger concludes. “There have been so few studies of the effect of carbon trading on the distribution of co-pollutants that any finding in this area would help us inform policy on emissions trading.”

This story was originally published on the Agricultural and Applied Economics website. More information about this project is available in this podcast