Transferable Discharge Permits and the Control of Stationary Source Air Pollution: A Survey and Synthesis

Abstract

The use of a transferable discharge permit (TDP) control system appears to offer real potential for achieving air-quality goals at a minimum cost both in allocating the offsets in nonattainment regions and in allocating the prevention of significant deterioration (PSD) increments in attainment regions. The current reforms embodied in the bubble concept and the offset policy represent substantial moves in this direction, but they contain important restrictions on transferability. How much is accomplished by these reforms in practice will only be determined after we have sufficient experience with them to see how constraining these restrictions turn out to be. Similarly, it would be a mistake to ignore the host of issues which must be resolved if the current system is to be replaced by a regularized TDP market. From a survey of those issues and what we know both theoretically and empirically about them, there emerges not only a menu of approaches which can be taken, but also a sense that the general approach can be usefully tailored to individual circumstances. The ultimate success of the current and potential further reforms will depend on future events at present only dimly perceived. These include legal issues, the development of monitoring instrumentation,more » and further empirical work toward defining a balanced compromise between administrative complexity and cost-effectiveness. The theoretical and empirical case for transferable discharge permit systems is extensive and persuasive; it is also incomplete. Simulations are suggestive, not conclusive; many small details that could serve to undermine the central strengths of the proposal are omitted by assumption from these simulations. The enthusiasm built up by these initial positive results should not blind us to potential flaws as TDP systems move closer to becoming operational. 47 references.« less