Economic incentives and point source emissions : choice of modeling platform

The purpose of this study is to identify the best modeling platform for the analysis of alternative environmental policy instruments designed to reduce the emission of pollutants from point sources, most notably, central power generating stations and manufacturing facilities. The primary analysis of concern is a cost-effectiveness investigation of the policy; where for the most part, the cost of compliance is a multidimensional variable that includes the private costs incurred by the owners of the facility, measures of the change in the cost of providing the facility's product, and estimates of the change in facility capacity factors. The range of pollutants under consideration include the usual menu of air- and waterborne emissions as well as solid and liquid wastes finding their way to landfills and other such disposal options. The range of policies considered include: (a) tariffs on the emission of pollutants; (b) tariffs and subsidies applied to the inputs or the outputs of the point source activities under consideration; (c) limits on the pollutant emissions themselves; and (d) directives regarding the installation of particular equipment and/or the alteration of process activities. The paper also discusses a nonexhaustive set of issues associated with the modeling of point source emissions and policies for their control.