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Introduction into the environment. If an emitter finds that the tax incurred from polluting is greater than the abatement costs, it will reduce its pollution releases. If the opposite is true, so that the cost of abatement is greater than the tax, the emitter will not undertake the abatement project and emissions will be greater. The overall cost of abatement is reduced since emitters with lower abatement costs will reduce pollution more than those with higher abatement costs. Both taxes and subsidies should be used in designing an efficient policy, otherwise an asymmetry occurs at the baseline pollution level. If only taxes are imposed, some low-cost abatement projects may not be undertaken if they are located at facilities that have already obtained baseline emissions. If only subsidies are used, low-cost abatement projects at facilities above the baseline will not be undertaken because abatement projects at such facilities are not eligible for subsidies. The third approach to regulation—emission trading—involves the trading of emission reduction credits, which are sometimes referred to as permits, that give legal permission to emit a certain quantity of a pollutant. There are two basic trading regimes—capand-trade, and baseline-and-trade (Rosenzweig, et al. 2002). In a cap-and-trade system, the regulator sets a cap for the maximum level of emissions that can be released from a source. Regulators then issue a permit to the source specifying how much can be emitted. The permits are freely transferable so they can be bought or sold. The control authority issues the number of permits needed to produce the desired aggregate emission level. Under a baseline-andcredit system, a baseline is determined for each participant against which its performance is measured. If an action is taken to reduce emissions, the difference between the baseline and the actual emissions creates an emissions reduction credit (ERC), which can be traded. Under either system, emitters are allowed flexibility in determining how to meet air quality standards—either by reducing pollution on site or by purchasing credits. Emitters with low abatement costs will choose to reduce emissions and sell excess permits; high abatement cost emitters will choose to buy permits, thereby avoiding abatement costs. Thus, the overall cost of achieving any given emission target will be reduced. 7
Improving Transboundary Air Quality with Binational Emission Reduction Credit Trading In theory, any of the three basic regulatory approaches can result in optimal pollution abatement. Command-and-control, however, requires that a single decision-maker—the regulator—have specific knowledge of conditions at each emission site. In practice, it is unlikely that regulators will have access to such detailed (and often proprietary) information, making it unlikely that an optimal policy will be implemented. By contrast, both corrective taxes and permit trading rely on decentralized decision-making. Polluters respond directly to market incentives by setting emission levels. Changes in market conditions change incentives, which result in individual decision-makers dynamically adjusting emissions over time. Such dynamic adjustment occurs only with a delay, if at all, under command-and-control because changes in regulations must be approved through a lengthy procedure. COORDINATING POLICY ON THE BORDER The Paso del Norte illustrates the problem faced by many twin cities along the U.S.-Mexican border: The environmental fates of border cities are not under their sole control, but rather depend upon the policies adopted by governments and implemented by industries in their twin city on the other side of the border. Circumstances— rapid industrialization, population growth, and unfavorable topography—conspire to make the problem more acute in El Paso-Ciudad Juárez, but the issues faced in the Paso del Norte region are the same issues that must be dealt with by other communities on the border. If air quality goals are to be met, there is a need for policy coordination between the United States and Mexico. There are special difficulties in coordinating policy on the border that are not present in other venues. First are the language differences and other cultural misunderstandings that people communicating across the border must overcome. At the local level, this is a lesser problem than might be expected because the border has developed its own unique binational culture. Economic and social border criss-crossing is common. Both English and Spanish are commonly spoken. Binational sport leagues, philanthropic clubs, and other social organizations can be found (Barry 1994). It is usual for assembly plants located on the Mexican side of the border, called 8
Page 1 and 2: THE SCERP MISSION The Southwest Con
Page 3 and 4: Authors SCERP Monograph Series, no.
Page 5 and 6: Published by San Diego State Univer
Page 8: Contents Foreword v Prefacio ix Pre
Page 11 and 12: Improving Transboundary Air Quality
Page 14 and 15: Prefacio “Si vale la pena tener u
Page 16: Prefacio pudiera ser difícil, cost
Page 22 and 23: I Introduction THE VIEW FROM EL PAS
Page 24 and 25: Introduction Resource Conservation
Page 26 and 27: Introduction approaches to correcti
Page 30 and 31: Introduction maquiladoras, to hire
Page 32 and 33: Introduction (PM 10 and PM 2.5 )—
Page 34 and 35: Introduction installing scrubbers,
Page 36 and 37: Introduction The existence of emiss
Page 38 and 39: Introduction would require an initi
Page 40 and 41: Introduction EPE generated emission
Page 42 and 43: OVERVIEW Introduction This volume i
Page 44 and 45: II A Snapshot of the Border THE MEA
Page 46 and 47: A Snapshot of the Border states—B
Page 48 and 49: A Snapshot of the Border Table 1. U
Page 50 and 51: A Snapshot of the Border Interestin
Page 52 and 53: Table 3. Percentage Change in Borde
Page 54 and 55: A Snapshot of the Border Another so
Page 56 and 57: A Snapshot of the Border plants tha
Page 58 and 59: A Snapshot of the Border Air Qualit
Page 60 and 61: A Snapshot of the Border quality. T
Page 62 and 63: A Snapshot of the Border million in
Page 64: A Snapshot of the Border THE ENVIRO
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Improving Transboundary Air Quality
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Appendix A Excerpts from the Border
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Environmental Regulation and the Bo
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Environmental Regulation and the Bo
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Nearly 90% think Mexican environmen
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Appendix B Survey Instrument Encues
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Manquiladora Attitudes 13) ¿Tu com
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Manquiladora Attitudes 22)¿Habías
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V Designing a Transborder Trading S
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Designing a Transborder Trading Sch
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abatement activities, 4, 6-7, 16, 1
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automobile and truck, 47 banking, 2
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nitrogen oxide (NO x), 9-10, 16-18,
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