Cooperative and market-based solutions to pollution abatement problems

This work concerns itself with the possibility of solutions, both cooperative and market based, to pollution abatement problems. In particular, we are interested in pollutant emissions in Southern California and possible solutions to the abatement problems enumerated in the 1990 Clean Air Act. A tradable pollution permit program has been implemented to reduce emissions, creating property rights associated with various pollutants.

Before we discuss the performance of market-based solutions to LA's pollution woes, we consider the existence of cooperative solutions. In Chapter 2, we examine pollutant emissions as a trans boundary public bad. We show that for a class of environments in which pollution moves in a bi-directional, acyclic manner, there exists a sustainable coalition structure and associated levels of emissions. We do so via a new core concept, one more appropriate to modeling cooperative emissions agreements (and potential defection from them) than the standard definitions.

However, this leaves the question of implementing pollution abatement programs unanswered. While the existence of a cost-effective permit market equilibrium has long been understood, the implementation of such programs has been difficult. The design of Los Angeles' REgional CLean Air Incentives Market (RECLAIM) alleviated some of the implementation problems, and in part exacerbated them. For example, it created two overlapping cycles of permits and two zones of permits for different geographic regions. While these design features create a market that allows some measure of regulatory control, they establish a very difficult trading environment with the potential for inefficiency arising from the transactions costs enumerated above and the illiquidity induced by the myriad assets and relatively few participants in this market.

It was with these concerns in mind that the ACE market (Automated Credit Exchange) was designed. The ACE market utilizes an iterated combined-value call market (CV Market). Before discussing the performance of the RECLAIM program in general and the ACE mechanism in particular, we test experimentally whether a portfolio trading mechanism can overcome market illiquidity. Chapter 3 experimentally demonstrates the ability of a portfolio trading mechanism to overcome portfolio rebalancing problems, thereby inducing sufficient liquidity for markets to fully equilibrate.

With experimental evidence in hand, we consider the CV Market's performance in the real world. We find that as the allocation of permits reduces to the level of historical emissions, prices are increasing. As of April of this year, prices are roughly equal to the cost of the Best Available Control Technology (BACT). This took longer than expected, due both to tendencies to mis-report emissions under the old regime, and abatement technology advances encouraged by the program. Vve also find that the ACE market provides liquidity where needed to encourage long-term planning on behalf of polluting facilities.

Metallogenic Provinces of the Southwestern United States and Northern Mexico

Some of the metallogenic provinces of the southwestern United States and northern Mexico are defined by the geographic distribution of trace elements in the primary sulfide minerals chalcopyrite and sphalerite. The elements investigated include antimony, arsenic, bismuth, cadmium, cobalt, gallium, germanium, indium, manganese, molybdenum, nickel, silver, tellurium, thallium, and tin. Of these elements, cobalt, gallium, germanium, indium, nickel, silver, and tin exhibit the best defined geographic distribution.

The data indicate that chalcopyrite is the preferred host for tin and perhaps molybdenum; sphalerite is the preferred host for cadmium, gallium, germanium, indium, and manganese; galena is the preferred host for antimony, bismuth, silver, tellurium, and thallium; and pyrite is the preferred host for cobalt, nickel, and perhaps arsenic. With respect to the two minerals chalcopyrite and sphalerite, antimony, arsenic, molybdenum, nickel, silver, and tin prefer chalcopyrite; and bismuth, cadmium, cobalt, gallium, germanium, indium, manganese, and thallium prefer sphalerite. This distribution probably is the result of the interaction of several factors, among which are these: the various radii of the elements, the association due to chemical similarities of the major and trace elements, and the degree of ionic versus covalent and metallic character of the metal-sulfur bonds in chalcopyrite and sphalerite. The type of deposit, according to a temperature classification, appears to be of minor importance in determining the trace element content of chalcopyrite and sphalerite.

A preliminary investigation of large single crystals of sphalerite and chalcopyrite indicates that the distribution within a single crystal of some elements such as cadmium in sphalerite and indium and silver in chalcopyrite is relatively uniform, whereas the distribution of some other elements such as cobalt and manganese in sphalerite is somewhat less uniform and the distribution of tin in sphalerite is extremely erratic. The variations in trace element content probably are due largely to variations in the composition of the fluids during the growth of the crystals, but the erratic behavior of tin in sphalerite perhaps is related to the presence of numerous cavities and inclusions in the crystal studied.

Maps of the geographic distribution of trace elements in chalcopyrite and sphalerite exhibit three main belts of greater than average trace element content, which are called the Eastern, Central, and Western belts. These belts are consistent in trend and position with a beltlike distribution of copper, gold, lead, zinc, silver, and tungsten deposits and with most of the major tectonic features. However, there appear to be no definite time relationships, for as many as four metallogenic epochs, from Precambrian to late Tertiary, are represented by ore deposits within the Central belt.

The evidence suggests that the beltlike features have a deep seated origin, perhaps in the sub-crust or outer parts of the mantle, and that the deposits within each belt might be genetically related through a beltlike compositional heterogeneity in the source regions of the ores. Hence, the belts are regarded as metallogenic provinces.