Do Environmental Markets Cause Environmental Injustice? Evidence from California's Carbon Market
Market-based environmental policies are widely adopted on the basis of allocative efficiency. However, there is growing concern that market-induced spatial reallocation of pollution could widen existing pollution concentration gaps between disadvantaged and other communities. We estimate how this “environmental justice” (EJ) gap changed following the 2013 introduction of California's carbon market, the world's second largest and most subjected to EJ critiques. Embedding a pollution dispersal model within a program evaluation framework, we find that previously widening EJ gaps in PM₂.₅, PM₁₀, NOₓ, and SOₓ from facilities subject only to the carbon market began narrowing as a consequence of the program. By 2017, the program returned these EJ gaps back to 2008 levels. We demonstrate that explicit modeling of pollution dispersal is critical for detecting these results.
Non-Technical Summaries
- The gap in pollution exposure between disadvantaged and other communities narrowed by 21 percent for nitrogen dioxide, 24 percent for...
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