Environmental Justice and Climate Policy : Is California ’ s Cap and Trade Failing Disadvantaged Communities ?

Pollution pricing policies offer advantages over traditional environmental regulation in compliance flexibility and cost effectiveness, but introduce more uncertainty over where emissions will occur. Consequently, environmental justice organisations have raised equity concerns about California’s flagship cap-and-trade program; greenhouse gas emissions trading could generate increased local concentrations of criteria air pollutants in socioeconomically disadvantaged neighbourhoods. Using U.S. Environmental Protection Agency (EPA) air quality monitoring station data, I use spatial interpolation to construct a census tract-level ten-year panel of concentration for six pollutants. I estimate a difference-in-differences model with fixed effects, and find that cap and trade generally improved relative equity for CO, NO2, PM2.5, PM10 and SO2 but worsened it for O3.