Economic Implications of Regulating Chlorofluorocarbon Emissions from Nonaerosol Applications

by Adele Palmer, W. E. Mooz, Timothy H. Quinn, Kathleen A. Wolf

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Concern over danger to the ozone layer led the Environmental Protection Agency to ban most chlorofluorocarbon (CFC) aerosol applications, but U.S. nonaerosol emissions could reach 600 million pounds annually by 1990. The report examines two strategies for controlling emissions, one based on mandatory controls, the other on economic incentives. Either could reduce accumulated emissions a modest 15 percent over the next ten years. The policy ultimately chosen will depend on more accurate knowledge of CFC depletion of the ozone layer, if any, of the resulting environmental damage, and thus of the desired level of emission reductions. If drastic reductions are required, beyond those achievable by controls, the choice appears to lie between outright bans and economic incentives. Bans would impose very high costs on user groups and the economy as a whole. Economic incentives would impose lower costs on the economy, but could seriously injure CFC user-industries unless wealth transfers were compensated.

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