School of Public & Environmental Affairs Podcast Series
In the early 1990s, in an effort to combat acid rain, the United States government initiated the sulfur dioxide emission allowance trading program. Under the program, factories that cannot afford to reduce sulfur dioxide emissions can buy allowances from factories that can. But some critics worried that emissions trading would create so-called pollution hot spots concentrated in poor and minority areas.
According to SPEA researcher Evan Ringquist, though, that concern has not materialized.
“In a nutshell we found that the spatial transfer of sulfur dioxide pollution that the trading system allows did not concentrate additional pollution in poor communities nor did it transfer disproportionate amount of pollution into minority communities,” says Ringquist, director of Programs in Public Affairs and Public Policy at SPEA.
The initial concern, dating back to the ‘90s, stemmed from the fact that many low income and minority neighborhoods are near older factories and utilities. Because of their age, the theory went, such businesses would be less likely to be able to clean up their act.
“The idea is there might be this unintended consequence,” Ringquist says, “that as we pursue efficiency, which is a really good thing, we might inadvertently allow these older facilities in poor and minority areas to release more pollution than they otherwise would have.”
To test the theory, Ringquist analyzed more than 1 million allowance trades made over the past two decades, and found something surprising about older facilities: “They’re big, they release a lot of pollution, but they don’t necessarily find it more expensive to control their pollution so they don’t buy additional rights to pollute.”
Ringquist did find that higher concentrations of pollution tend to occur in areas where people have less overall education, but says that it’s wrong to assume that neighborhoods with lower levels of education are necessarily minority or low income neighborhoods. For example, Ringquist says, Latinos tend to have less education than other ethnic groups, but “ we find relatively consistent results that polluting facilities in communities with high proportions of Latino residents actually important less pollution. They sell allowances, they don’t buy them.”
Ringquist hopes that his findings will reduce opposition to allowance trading programs, and help policy makers more accurately assess the risks posed by new initiatives.
“We have excellent evidence that the sulfur dioxide allowance trading program worked in the way it was intended, meaning that it drove down the cost of pollution control by some estimates 50% and allowed us to reduce pollution much more than we would have been able to without the program,” he says. “It’s a win win, and that’s a nice story.”
Learn more about Evan Ringquist’s study of the sulfure dioxide allowance trading program.