Policy Design

Policy makers are increasingly testing innovative ways for regulating pollution—over the past decade, market-based environmental regulations have become a leading option. CEEP affiliates examine the role of these policies and whether they shift the pollution burden on various socio-economic groups.  

China is recently particularly dynamic in terms of introducing environmental policy. CEEP researcher Almond and co-authors examine the response of power plants to China’s tighter SO2standard that was established in 2014. The authors combine (independent) satellite data with readings from China’s emission monitoring system. While both data sources find a decrease in SOmeasures, the correspondence between the two measures is lower in areas that faced larger changes in the stringency of the standard. Both measures are plotted over time in the right figure. A potential explanation for the discrepancy in the two data sources in key regions is that plants overstated or falsified reductions. The new, stricter standards along with greater pressure to comply may have generated incentives for plant managers to falsify or selectively omit concentration data.  Their results suggest substantial room to strengthen incentives for accurate and comprehensive reporting as part of China’s national air pollution control efforts. An important first step involves clarifying reporting requirements and strengthening penalties for data inaccuracies or falsification.

SO2 measurement and satellite readings

CEEP faculty affiliate Barrett has extensively studied international environmental agreements. A recent article highlights why states generally struggle to cooperate voluntarily and enforce international agreements to cooperate, but find it relatively easy to coordinate actions. Coordination may fall short of supporting an ideal outcome, but it nearly always works better than the alternatives.

International cooperation