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Determinants of compliance in the emissions compensation program in Santiago, Chile

Published online by Cambridge University Press:  18 July 2005

MILAGROS PALACIOS
Affiliation:
Master Program in Natural Resources and Environmental Economics, Universidad de Concepción, Chile
CARLOS CHÁVEZ
Affiliation:
Department of Economics, Universidad de Concepción, Casilla 1987, Concepción, Chile. Tel: (56-41) 203-067. Fax: (56-41) 231-131. Email: [email protected]

Abstract

The Emissions Compensation (EC) Program in Santiago, Chile, has been affected from the beginning by the incidence of individual violations of maximum-emission capacity permits. Based on information at the individual source level, in this paper we develop and estimate a model explaining the individual compliance decision with emission capacity permits. Our results indicate that the compliance behavior of sources during the period 1993–1999 do in fact depend on their individual characteristics. Among other factors, type of equipment used, industrial sector to which the source belongs, fuel type used, the initial allocation of emission capacity permits to the source, and population density as well as average income in the area where the source is located, turn out to be relevant. Furthermore, the evidence does not allow us to reject the presence of structural change in the individual decision to comply with permit holdings because of the introduction of natural gas in the Metropolitan Region of Santiago at the end of 1997.

Type
Research Article
Copyright
© 2005 Cambridge University Press

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