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Designing a Transborder Trading Scheme incentive to officials in the buyer’s jurisdiction is to approve baselines that generate ERCs providing net environmental benefits in excess of abatement costs. Thus, incentives for these officials are more closely aligned with society’s and should be given responsibility for determining baselines. 3. Coverage should be as extensive as possible within the twin city airsheds to achieve the maximum gain from emissions trading. 4. An Internet registry should be established for each twin city listing ERCs. A formal exchange is unlikely to be practical in the short run, but Internet registration is a low-cost way to improve market efficiency. 5. Borrowing and banking should be allowed, provided care is taken to avoid intertemporal hotspots. As argued previously, intertemporal flexibility improves efficiency. 6. Projects certified for transborder trading should adopt lowemission technology. This proposal provides two advantages. First, ERCs generated from adoption of low-emission technologies are more likely to be real than ERCs generated from reductions in production. Second, adoption of low-emission technologies is less likely to affect employment adversely. 7. Projects should be chosen for their minimum negative impact on employment. This recommendation is to comply with the concern expressed by workshop participants that emissions trading will adversely affect employment opportunities, which is a special concern among Mexican nationals. It is best not to require that projects generating ERCs have no adverse effect on employment because there may be cases in which emissions trading, while adversely affecting employment, has a lesser adverse effect than other abatement projects. 8. Care must be taken that emissions trading not create temporal or spatial hotspots. While this is more a general consideration than a concern specific to a transborder trading program, concerns about potential hotspots were frequently expressed at workshops and so should be explicitly addressed to maximize public acceptance. 9. Offsets should be more than one-reduction-for-one-pollutant with the ERC to ensure that the trade has an overall benefit to the environment and the health of the residents. 123
Improving Transboundary Air Quality with Binational Emission Reduction Credit Trading 10. Monitoring should be handled by private third parties and paid for by the parties to the trade. The use of third-party monitoring is common among existing emissions trading programs (Rosenzweig, et al. 2002). They are cost-effective, and because they require parties to the trade to pay, they also internalize the cost of monitoring, which helps ensure that only socially beneficial trades take place. An important additional factor for transborder emissions trading is that the use of a private third party reduces infringements on sovereignty. 11. Primary responsibility for certifying ERC trades should rest with the officials of the buyer’s home country. The asymmetry benefits that accrue from emissions trading to the seller are again at play. The seller’s jurisdiction benefits from reduced emissions, improved air quality, and from the financial gains of selling ERCs; therefore, the seller’s jurisdiction always has an incentive to certify a trade, even when environmental gains do not justify doing so. On the other hand, for a trade to benefit the citizens of the purchaser’s jurisdiction, transportation of the pollutant must be sufficient such that emissions are reduced in the neighborhood of the purchaser. When this condition is not met, officials of the buyer’s jurisdiction should not approve the use of the ERC as an offset. Thus, the officials of the seller’s and buyer’s jurisdictions face different incentives—the seller’s to always approve and the buyer’s to approve only if the ERC generates environmental benefits near the buyer. Because only mutually beneficial trades should be approved, only the buyer’s jurisdiction has the correct incentive. 12. Enforcement should be the primary responsibility of the purchaser’s jurisdiction. Even if no true emission reduction occurs, the seller’s jurisdiction benefits from the revenue generated from the sale of the ERC. Thus, the incentive to enforce emission reduction is attenuated for officials of the seller’s jurisdiction. The buyer’s jurisdiction only benefits if emission reduction actually occurs. This provides an incentive to officials of the buyer’s jurisdiction to enforce emission reductions strictly. 124
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THE SCERP MISSION The Southwest Con
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Authors SCERP Monograph Series, no.
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Published by San Diego State Univer
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Contents Foreword v Prefacio ix Pre
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Improving Transboundary Air Quality
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Prefacio “Si vale la pena tener u
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Prefacio pudiera ser difícil, cost
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I Introduction THE VIEW FROM EL PAS
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Introduction Resource Conservation
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Introduction approaches to correcti
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Introduction into the environment.
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Introduction maquiladoras, to hire
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Introduction (PM 10 and PM 2.5 )—
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Introduction installing scrubbers,
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Introduction The existence of emiss
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Introduction would require an initi
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Introduction EPE generated emission
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OVERVIEW Introduction This volume i
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II A Snapshot of the Border THE MEA
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A Snapshot of the Border states—B
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A Snapshot of the Border Table 1. U
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A Snapshot of the Border Interestin
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Table 3. Percentage Change in Borde
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A Snapshot of the Border Another so
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A Snapshot of the Border plants tha
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A Snapshot of the Border Air Qualit
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A Snapshot of the Border quality. T
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A Snapshot of the Border million in
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A Snapshot of the Border THE ENVIRO
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Appendix A Excerpts from the Border
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Page 162 and 163: abatement activities, 4, 6-7, 16, 1
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Page 166 and 167: nitrogen oxide (NO x), 9-10, 16-18,
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