TY  - JOUR
AU  - Sigman,Hilary
AU  - Chang,Howard F.
TI  - The Effect of Allowing Pollution Offsets With Imperfect Enforcement
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 16860
PY  - 2011
Y2  - March 2011
UR  - http://www.nber.org/papers/w16860
L1  - http://www.nber.org/papers/w16860.pdf
N1  - Author contact info:
Hilary Sigman
Department of Economics
Rutgers University
75 Hamilton Street
New Brunswick, NJ  08901-1248
Fax: 732/932-7416
E-Mail: sigman@econ.rutgers.edu

Howard F. Chang
University of Pennsylvania Law School
3400 Chestnut Street
Philadelphia, PA 19104-6204
Tel: 609-688-0245
Fax: 609-688-8602
E-Mail: hchang@law.upenn.edu
AB  - Public policies for pollution control, including climate change policies, sometimes allow polluters in one sector subject to an emissions cap to offset excessive emissions in that sector with pollution abatement in another sector.  The government may often find it more costly to verify offset claims than to verify compliance with emissions caps. Concerns about such difficulties in enforcement may lead regulators to restrict the use of offsets.  In this paper, we demonstrate that allowing offsets may increase pollution abatement and reduce illegal pollution, even if the government has a fixed enforcement budget. We explore the circumstances that may make allowing pollution offsets an attractive option when enforcement is costly.
ER  -