The abatement of major pollutants in air and water by environmental catalysis

This review reports the research progress in the abatement of major pollutants in air and water by environmental catalysis. For air pollution control, the selective catalytic reduction of NO _x (SCR) by ammonia and hydrocarbons on metal oxide and zeolite catalysts are reviewed and discussed, as is the removal of Hg from flue gas by catalysis. The oxidation of Volatile organic compounds (VOCs) by photo- and thermal-catalysis for indoor air quality improvement is reviewed. For wastewater treatment, the catalytic elimination of inorganic and organic pollutants in wastewater is presented. In addition, the mechanism for the procedure of abatement of air and water pollutants by catalysis is discussed in this review. Finally, a research orientation on environment catalysis for the treatment of air pollutants and wastewater is proposed.     

Optimal quasi-market choice in the presence of pollution externalities

When the relationship between emissions and ambient pollution is known, it is possible to implement a program to achieve economically efficient pollution levels, even when the control agency knows nothing about the victim's valuation of pollution damages or about emission abatement costs. Unlike a Pigouvian tax, the program provides the correct incentives for entry and exit whether or not marginal damages from a firm's emissions vary over the range of these emissions. Through the provision of “missing” markets, sizable revenues are raised while allocative distortions are corrected.     

Pollution Taxes and Pollution Abatement in an Oligopoly Supergame

This paper investigates the effects of an emissions tax on the incentives for oligopolists to acquire alternative pollution abatement technologies. The analysis is conducted in terms of a repeated game and it is demonstrated that there are circumstances in which the firms may reject the option of acquiring the pollution abatement equipment, even when this lowers their production costs.     

Double-dipping in environmental markets

There is an increasing tendency to use markets to induce the provision of environmental services. As such markets increase in scope, potential market participants might sell multiple environmental services. The question we consider here is whether participants in such markets should be allowed to sell credits in more than one market simultaneously. Some have argued in favor of such “double-dipping”, because it would make the provision of environmental services more profitable. In practice however, most programs do not allow double-dipping. We show that if the optimal level of pollution abatement is sought, then double-dipping maximizes societal net benefits. However, if pollution policies are set in a piecemeal fashion, then the caps for each market are unlikely to be optimal and, in this second-best setting, a policy prohibiting double-dipping can lead to greater social net benefits. We explore conditions under which a single-market policy is preferred, or equivalently, where piecemeal policies are likely to yield particularly inefficient outcomes.     

Budget-Balancing Incentive Mechanisms

A. P. Xepapadeas [J. Environ. Econom. Management20, 113-26, 1991] developed a pollution abatement incentive mechanism that both reduces the information requirements of a regulator and is "budget-balancing," drawing only on the social gains from pollution abatement to encourage firm compliance. This paper demonstrates that, contrary to Xepapadeas, the budget-balancing system of random penalties cannot be used to induce compliance with the regulator′s objectives if firms are risk neutral. However, the mechanism can be successfully applied if firms are sufficiently risk averse [E. Rasmusen, RAND J. Econom.18, 428-435, 1987].     

Interactive pollutants and joint abatement costs: Achieving water quality standards with effluent charges

This paper extends earlier work on the standards and prices approach to pollution control by considering simultaneously spatial considerations, interactive pollutants, and joint abatement costs. The form of environmental constraints appropriate to water pollution problems is discussed in detail and the implications for the standards and prices approach to water pollution control are assessed. The presence of interactive pollutants and joint abatement costs is shown to have important implications for both the theoretical properties and the implementation of the standards and prices approach.     

Emissions standards and ambient environmental quality standards with stochastic environmental services

Many important environmental policies involve some combination of emission controls and ambient environmental quality standards, for instance SO₂ emissions are capped under Title IV of the U.S. Clean Air Act Amendments while ambient SO₂ concentrations are limited under National Ambient Air Quality Standards (NAAQS). This paper examines the relative performance of emissions standards and ambient standards when the natural environment provides stochastic environmental services for assimilating pollution. For receiving media characterized by greater dispersion in the distribution of environmental services, the optimal emissions policy becomes more stringent, whereas the optimal ambient policy generally becomes more lax. In terms of economic performance, emissions policies are superior to ambient policies for relatively non-toxic pollutants, whereas ambient standards welfare dominate emissions standards for sufficiently toxic pollutants. In the case of combined policies that jointly implement emissions standards and ambient standards, we show that the optimal level of each standard relaxes relative to its counterpart in a unilateral policy, allowing for greater emissions levels and higher pollution concentrations in the environmental medium.     

Emissions standards and ambient environmental quality standards with stochastic environmental services

Many important environmental policies involve some combination of emission controls and ambient environmental quality standards, for instance SO₂ emissions are capped under Title IV of the U.S. Clean Air Act Amendments while ambient SO₂ concentrations are limited under National Ambient Air Quality Standards (NAAQS). This paper examines the relative performance of emissions standards and ambient standards when the natural environment provides stochastic environmental services for assimilating pollution. For receiving media characterized by greater dispersion in the distribution of environmental services, the optimal emissions policy becomes more stringent, whereas the optimal ambient policy generally becomes more lax. In terms of economic performance, emissions policies are superior to ambient policies for relatively non-toxic pollutants, whereas ambient standards welfare dominate emissions standards for sufficiently toxic pollutants. In the case of combined policies that jointly implement emissions standards and ambient standards, we show that the optimal level of each standard relaxes relative to its counterpart in a unilateral policy, allowing for greater emissions levels and higher pollution concentrations in the environmental medium.     

Incentives to diffuse advanced abatement technology under environmental liability law

Polluting firms with advanced abatement technology at their disposal have incentives or disincentives to share this technology with other polluting firms. The ‘direction’ and extent of those incentives depends on the liability rule applicable and the way technical change impacts marginal abatement costs. We establish that incentives for diffusion are socially optimal under strict liability and socially suboptimal under negligence if technical change lowers marginal abatement costs for all levels of abatement. Negligence may, however, induce better diffusion incentives than strict liability if technical change decreases (increases) marginal abatement costs for low (high) levels of abatement.     

Stochastic pollution, costly sanctions, and optimality of emission permit banking

This paper identifies a new economic motive for pollution regulations that allow polluting firms to bank and borrow emission permits over time. When aggregate pollution is stochastic, an intertemporal permit trading regime can provide firms with efficient incentives for pollution abatement without the need for costly government enforcement actions that would otherwise be required.     

Dynamic incentive regulation of diffuse pollution

Diffuse pollution from agriculture and extractive industries reduces air and water quality and contributes to climate change. We consider a setting in which a regulator must incentivize unobserved abatement given that firms have limited liability, and when they can enter and exit. We demonstrate that a simple dynamic incentive scheme can solve this difficult regulatory problem: firms pay a constant tax and receive rebates following periods of low pollution. We apply the model to water pollution from a fracking operation and simulate the contract to explore the volatility of the firm's payments and the costs of limited liability.     

Firm incentives to promote technological change in pollution control: Reply

Our paper (Firm incentives to promote technological change in pollution control, J. Environ. Econom. Management 17, 247–265 (1989)) concluded that firms will most actively search for new abatement technology under taxes and auctioned permits. However, Marin (Firm incentives to promote technological change in pollution control: Comment, J. Environ. Econom. Management, 21, 297–300 (1991)) argues that we overstated the efficacy of auctioned permits: that we used an unrealistic assumption which might affect our findings; that auctions may misallocate permits and are administratively burdensome; and that innovation detection is difficult under this regime. Here we show that our results are largely unchanged when the assumption questioned by Marin is relaxed. We also argue that he overstates the other concerns.     

Robust technology policy against emission leakage: The case of upstream subsidies

Asymmetric regulation of a global pollutant between countries can alter the competitiveness of industries and lead to emissions leakage, which hampers countries’ welfare. In order to limit leakage, governments consider supporting domestic trade-exposed firms by subsidizing their investments in abatement technology. The suppliers of such technologies tend to be less than perfectly competitive, particularly when both emissions regulations and advanced technologies are new. In this context of twin market failures, we consider the relative effects and desirability of subsidies for abatement technology. We find a more robust recommendation for upstream subsidies than for downstream subsidies. Downstream subsidies tend to increase global abatement technology prices, reduce pollution abatement abroad and increase emission leakage. On the contrary, upstream subsidies reduce abatement technology prices, and hence also emissions leakage.     

Prices vs quantities with multiple pollutants

We examine the choice of policy instruments (price, quantity or a mix of the two) when two pollutants are regulated and firms' abatement costs are private information. Whether abatement efforts are complements or substitutes is key determining the choice of policies. When pollutants are complements, a mixed policy instrument with a tax on one pollutant and a quota on another is sometimes preferable even if the pollutants are identical in terms of benefits and costs of abatement. Yet, if they are substitutes, the mixed policy is dominated by taxes or quotas.     

Optimal pollution permit endowments in markets with endogenous emissions

In a permit market with endogenous emissions, both firms and citizens purchase permits. Presented here are static and dynamic models of pollution permit markets with endogenous emissions. The optimal permit endowments are characterized when the regulator faces uncertainty about damages and uncertainty about the severity of the citizens’ collective action problem. Due to the possibility of learning over time, the regulator issues a larger number of permits in the first period of the dynamic model than in the static model.     

Incentives and prices in an emissions trading scheme with updating

Emissions trading schemes where allocations are based on updated baseline emissions give firms less incentive to reduce emissions for a given quota (or allowance) price. Nevertheless, according to Böhringer and Lange [On the design of optimal grandfathering schemes for emission allowances, Europ. Econ. Rev. 49 (2005) 2041–2055], such allocation schemes are cost-effective if the system is closed and allocation rules are identical across firms. In this paper, we show that the cost-effective solution may be infeasible if marginal abatement costs grow too fast. Moreover, if a price cap or banking/borrowing is introduced, the abatement profile is no longer the same as in the case with an auction (or lump-sum allocation). In addition, we show that with allocation based on updated emissions, the quota price will always exceed marginal abatement costs, possibly misguiding policy makers and investors about abatement costs. Numerical simulations indicate that the quota price most likely will be several times higher than marginal abatement costs, unless a significant share of allowances is auctioned.     

Stochastic Pollution, Permits, and Merger Incentives

Pollution permit regulations introduce nonlinearities into the objective function of a polluting firm. We develop a microeconomic model to show the effects these nonlinearities might have upon firm decisions when emissions are stochastic. Under perfect competition the fraction of planned pollution covered by permits is shown to be separable from planned production. We also demonstrate that permit management incentives may motivate a merger of otherwise independent firms. Incentives to petition for “bubble” coverage are also considered. The model is studied under risk neutrality and risk aversion. Imperfectly competitive situations in the output and permit markets are also analyzed.     

Pollution control and technological advance: A dynamic model of the firm

The paper extends the static comparison of effluent taxes and effluent standards to a dynamic world in which firms invest resources in improving their abatement technology as well as their production technology. The analysis shows that the two pollution control policies lead to a distinctly different allocation of research and development (R & D) funds between improvement in abatement technology and improvement in production technology. The model also shows that a temporally constant effluent tax leads to an increasing effluent discharge rate for “typical” firms. Other results concern the pattern of output growth and the rate of technological advance.     

The optimal pricing of pollution when enforcement is costly

We consider the pricing of a uniformly mixed pollutant with a model of optimal, possibly firm-specific, emissions taxes and their enforcement under incomplete information about firms’ abatement costs, enforcement costs, and pollution damage. We argue that optimality requires an enforcement strategy that induces full compliance by every firm, except possibly when a regulator can base the probabilities of detecting individual violations on observable correlates of violators’ actual emissions. Moreover, optimality requires discriminatory taxes, except when a regulator is unable to use observable firm-level characteristics to gain some information about the variation in firms’ abatement costs or monitoring costs.     

Total phosphorus accident pollution and emergency response study based on geographic information system in Three Gorges Reservoir area

• A new algorithm of two-dimensional water quantity and the quality model was built. • The migration and diffusion of TP was simulated. • The emergency measures for sudden water pollution accidents was proposed. In recent years, sudden water pollution accidents in China’s rivers have become more frequent, resulting in considerable effects on environmental safety. Therefore, it is necessary to simulate and predict pollution accidents. Simulation and prediction provide strong support for emergency disposal and disaster reduction. This paper describes a new two-dimensional water quantity and the quality model that incorporates a digital elevation model into the geographic information system. The model is used to simulate sudden water pollution accidents in the main stream of the Yangtze River and Jialing River in the Chongqing section of the Three Gorges Reservoir area. The sectional velocity distribution and concentration change of total phosphorus are then analyzed under four hydrological situations. The results show that the proposed model accurately simulates and predicts the concentration change and migration process of total phosphorus under sudden water pollution accidents. The speed of migration and diffusion of pollutants is found to be greatest in the flood season, followed by the water storage period, drawdown season, and dry season, in that order. The selection of an appropriate water scheduling scheme can reduce the peak concentration of river pollutants. This study enables the impact of pollutants on the ecological environment of river water to be alleviated, and provides a scientific basis for the emergency response to sudden water pollution accidents in the Three Gorges Reservoir area.