Cost-Effective Enforcement Of Environmental Standards

The body of information presented in this paper is directed to those individuals concerned with cost-effective enforcement of environmental standards. Its aim is twofold. One is to determine some of the differing impacts upon firm behavior of legal enforcement, of economic incentive enforcement, and of mixed legal-economic enforcement. A second objective is to initiate identification of enforcement systems which are most likely to minimize resource costs to firms and enforcement agencies of meeting environmental standards. A computerized model is used to simulate enforcement of the new source particu-late matter discharge standard for coal-fired power plants. Under current legal enforcement it is found that most plants will violate the standard, that small plants will control to higher removal levels than large plants and that firms will install relatively costly pollution control technology. Three enforcement alternatives are considered for overcoming these shortcomings: more stringent legal enforcement, economic incentive enforcement using effluent taxes, and a mixed system which uses device certification tests and effluent taxes. It is found that each of the alternatives can lead to the standard being met and tc more-or-less equal sharing in control burden across plant size. But it is only the two systems which use effluent taxes that give incentive for choosing least costly control technology. It is concluded that the two enforcement systems which use effluent taxes probably would encourage adoption of least cost control technology. This is likely to be a desirable outcome since it may lead to minimum resource costs to power plants and pollution control agencies of meeting fty ash standards. The general applicability of this conclusion to other enforcement situations is discussed.