Emissions trading and environmental justice: distributive fairness and the USA's Acid Rain Programme

Abstract

As emissions trading regimes become increasingly popular mechanisms for environmental pollution control around the world, environmentalists are asking whether market-based programmes meet their promise of both efficient and equitable pollution reductions. The emissions trading regime of the USA's Acid Rain Programme (ARP) is investigated in order to determine whether the programme has concentrated sulphur dioxide (SO₂) pollution disproportionately for the poor and people of colour. While the USA emissions trading regime has been hailed as a success for cost-efficiently reducing pollution in the aggregate, critics contend that the programme is insufficiently attentive to the localized concentrations of harmful SO₂ that trading can create. Further, advocates of environmental justice question whether emissions trading might exacerbate the disproportionate pollution burdens already facing the poor and people of colour. Stack emissions and pollution allowance holdings for all 110 power plants participating in Phase I of the trading programme are correlated with income and racial demographic characteristics of the people living around each plant to determine whether the ARP might raise distributive environmental justice concerns. Using USA Census data at the tract level, income and racial demographics around plants that increased and decreased their emissions as well as plants that were net purchasers and sellers of pollution allowances over the first three years of the programme are compared. For the first few years of the ARP, the emissions trading regime does not appear to have been concentrating SO₂ pollution disproportionately for the poor and racial minority populations.