An Investigation of Compliance Behavior and Enforcement of Emissions Trading Programs Using Experimental Analyses

EPA Grant Number: R829608
Title: An Investigation of Compliance Behavior and Enforcement of Emissions Trading Programs Using Experimental Analyses
Investigators: Murphy, James , Stranlund, John
Institution: University of Massachusetts - Amherst
EPA Project Officer: Hahn, Intaek
Project Period: January 1, 2002 through December 31, 2003 (Extended to April 28, 2005)
Project Amount: $227,860
RFA: Market Mechanisms and Incentives for Environmental Management (2001) RFA Text |  Recipients Lists
Research Category: Environmental Justice

Description:

This research will design and conduct laboratory experiments to examine compliance behavior in emissions trading programs. Particular emphasis is placed on developing practical guidelines for designing enforcement strategies for emissions trading programs that achieve high rates of compliance cost-effectively.

While there is a substantial body of economic theory about compliance and enforcement in emissions trading programs, and readily available information about how existing emissions trading programs are enforced, there are no empirical analyses of the determinants of compliance decisions in emission trading programs. Furthermore, there are no empirical analyses of various elements of actual or proposed enforcement designs. Toward filling these gaps, the overall objective of this research is to design and conduct laboratory experiments to test a number of hypotheses about compliance behavior and enforcement strategies for emissions trading programs.

Approach:

This research consists of a series of experiments, designed to build upon each other so that the research proceeds seamlessly from testing hypotheses about the determinants of compliance decisions with relatively simple enforcement mechanisms to more complicated designs to evaluate alternative enforcement mechanisms.

Expected Results:

We expect that this research will result in a number of publications in peer-reviewed academic journals. In addition, the investigators will present the results of this research at conferences and in seminars. The research, and efforts to disseminate the results, will provide policy-makers, regulators and researchers with a more comprehensive understanding of compliance behavior and the effectiveness of various enforcement tactics in emissions trading programs than is currently available. This will lead to a better understanding of how market mechanisms and incentives in managing environmental problems should be designed, implemented, and managed to meet environmental quality goals cost-effectively.

Publications and Presentations:

Publications have been submitted on this project: View all 22 publications for this project

Journal Articles:

Journal Articles have been submitted on this project: View all 1 journal articles for this project

Supplemental Keywords:

enforcement, compliance, tradable permits, cap and trade systems, laboratory experiments, cost effectiveness., RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Economics and Business, Market mechanisms, Social Science, financial mechanisms, market-based mechanisms, market incentives, policy instruments, effects of policy instruments, compliance behavior, policy making, impact of federal policy instruments, policy incentives, incentives, decision making, socioeconomics, enforcement and compliance, cap and trade systems, pollution fees, environmental impact fees, tradeable permits, allowance allocation, environmental economics, allowance market performance

Progress and Final Reports:

  • 2002 Progress Report
  • 2003 Progress Report
  • 2004
  • Final Report