RECLAIM: Los Angeles' New Market-Based Smog Cleanup Program.

Abstract

For 30 years economists argued the merits of market-incentives for environmental programs. Along the way, there have been small steps into the concept, often countered with vast amounts of resistance. In 1990, the air agency viewed as the nation's strongest purveyor of commandand- control regulations broke with tradition and initiated the world's largest, multi-industry, multi-pollutant trading program. This article chronicles, in three parts, the South Coast Air Quality Management District's REgional CLean Air Incentives Market-RECLAIM. In part one, "A New Idea Takes Root," the challenge and cost of attaining clean air is assessed. Reasons to consider market-incentives are discussed, along with the pros and cons of commandand- control regulations. In part two, "The Battle of Interests," the competing interests that shaped the regulations are presented. Here are the lessons learned from forging the idea through the fire of rule development. Large and small businesses, federal, state, and local agencies, and numerous environmental groups all influenced the final shape of the program. Finally, part three, "From Concept to Reality," looks at what it takes to implement the adopted rules. New permits, new emission reporting systems, and a new trading program mesh to ensure the successful operation and enforcement of RECLAIM.