THE BREN SCHOOL OF ENVIRONMENTAL SCIENCE AND MANAGEMENT
at the University of California, Santa Barbara

Presents

Catherine Wolfram

Associate Professor

University of California, Berkeley

"Sacred Cars? Optimal Regulation of Stationary

and Non-stationary Pollution Sources"

(read the paper)

Part of the 2007-2008 seminar series in

Environmental & Natural Resource Economics

Abstract

The goal of environmental regulation is to protect public health by reducing the presence of
certain pollutants. The health and environmental damages caused by a specific concentration
of a given pollutant in a given location at a given point in time are the same regardless of its
source. For political and practical reasons, however, environmental regulations have treated
point-source polluters, such as power plants, differently from mobile-source polluters, such as
vehicles. We compare existing regulations designed to reduce nitrogen oxide (NOx) emitted
from power plants to regulations of NOx emitted from vehicles. We estimate the marginal
costs of reducing NOx under these two regulatory programs. We find significant differences in
marginal abatement costs across source types, with the cost of reducing NOx from cars less than
one half of the cost of reducing NOx from power plants. We estimate efficiency losses of over $2
billion from the current policy approach to regulating NOx emissions.

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