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Improving Transboundary Air Quality with
Binational Emission Reduction Credit Trading
posal for the establishment of a baseline-and-trade program, with
responsibility for certification and enforcement assigned to the
home country of the emission purchaser.
ENDNOTES
1 This is not to imply that there has been no progress toward developing
binational institutions. Especially since the passage of the
North American Free Trade Agreement (NAFTA), new institutions
have been established to promote the exchange of information and
for the coordination of environmental policy. One important recent
effort in this regard has been the Border 2012 Program. This is a
joint program of the U.S. Environmental Protection Agency (EPA)
and Mexico’s Secretaría de Medio Ambiente y Recursos Naturales
(SEMARNAT) and involves the cooperation of U.S. and Mexican
governments, the 10 Mexican and U.S. border states, as well as U.S.
tribal governments. Several working groups have been established
under Border 2012, including a working group on air quality issues.
The issue of transborder institutions will be addressed in more
detail in Chapter III.
2 A version of this argument has also been applied to corrective
taxes.
3 The example implicitly assumes that the only market failure is
excessive air pollution.
4 The example ignores transaction costs, but these can easily be
incorporated. Suppose that the cost of searching for a trading partner,
negotiating the transaction, and enforcing the contract after the
transaction amounts to $20,000, then the net gain from the trade
will be $300,000 – $20,000 = $280,000.
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