Spatial Regulation of Air Toxics Hot Spots

Abstract

This paper analyzes the potential implications, in terms of net social costs and distribution of risks and abatement costs, of a policy to address the problem of air toxics “hot spots.” The policy we analyze involves regulation of air toxics sources at increasingly finer spatial resolutions. We develop a model of a decisionmaker choosing emission standards within a net cost minimization framework. Empirical application of the model to two counties in Florida demonstrates that regulation at finer resolutions could involve trade-offs between net social costs and equitable distribution of risks and, in some settings, between individual and population risks.