Do Pollution Markets Harm Low Income and Minority Communities? Ranking Emissions Distributions Generated by California's RECLAIM Program
We compare the spatial distribution of emissions from Southern California’s pollution-trading program with that of a counterfactual command-and-control policy. We develop a normatively significant metric with which to rank the various distributions in a manner consistent with an explicit well-behaved preference structure. Results suggest trading benefited all demographic groups and generated a more equitable overall distribution of emissions even after controlling for its lower aggregate emissions. Upper-income and white demographics had more desirable distributions relative to low-income and some minority groups under the RECLAIM trading program, however, and population shifts over time may have undermined anticipated gains for African Americans.
We thank Corbett Grainger for access to data. We are further grateful to Fabian Neuner and seminar participants at the Colorado School of Mines and the University of Colorado Workshop on Environmental and Resource Economics for helpful suggestions. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.