12 Dr. Joseph Shapiro – Is Air Pollution Regulation in the U.S. Too Lenient? Evidence from over 40 Pollution Offset Markets

Is U.S. air pollution policy still too lenient – even after decades of regulation?

In this episode, I’m joined by Dr. Joseph Shapiro (UC Berkeley, NBER, Energy Institute at Haas) to discuss his recent research using 40 pollution offset markets under the U.S. Clean Air Act. By looking at how much firms actually pay for emission reductions, Joe and his co-authors back out marginal abatement cost curves and compare them to the health and welfare benefits of cleaner air.

We talk about:

• How pollution offset markets work in practice, and why they exist at all
• Using market prices (instead of just engineering models) to estimate the costs of cutting emissions
• Comparing those costs with the benefits of avoided mortality and morbidity
• Why, in most markets, benefits still exceed costs by a wide margin
• The outlier case of Houston’s VOC market – the “Taylor Swift of offsets” – where fracking-driven demand pushed prices through the roof
• What all this means for debates on whether air regulations are “too strict” or still too lax

If you’re interested in how economics, regulation, and air pollution intersect – and in actually quantifying the trade-offs – this episode is for you.

For questions, comments or suggestions, you can contact me at arvid.viaene.ce@gmail.com