A BEJEAP Advances article.

Abstract

The Clean Air Act and its subsequent amendments have been lauded as the primary stimulant to the impressive improvement in local air quality in the US since 1970. A key component of these regulations is the New Source Review (NSR) requirement, which includes the contentious stipulation that when an existing plant seeks to modify its operations, the entire plant must comply with current standards for new sources. This requirement was included to improve air quality in dirty areas, and prevent a deterioration of air quality in clean areas. Yet, whether NSR provides the proper plant-level incentives is unclear: there are strong disincentives to undertake major plant modifications to avoid NSR. In our examination of more than 2500 and 2200 plant-level modification decisions and closures, respectively, we find empirical evidence suggesting that NSR retards modification rates, while doing little to hasten the closure of existing dirty plants.

Submitted: September 18, 2003 · Accepted: February 21, 2004 · Published: February 26, 2004

Originally published in Advances in Economic Analysis & Policy.

Recommended Citation

List, John A.; Millimet, Daniel L.; and McHone, Warren (2004) "The Unintended Disincentive in the Clean Air Act," Advances in Economic Analysis & Policy: Vol. 4 : Iss. 2, Article 2.
Available at: http://www.bepress.com/bejeap/advances/vol4/iss2/art2