Market-based environmental policies are widely adopted on the basis of net benefit maximization. However, there is a growing concern that market forces could increasing pollution in more disadvantaged communities. We estimate how this "environmental justice gap" changed following the 2013 introduction of California's carbon market, the world's second largest and the one most subjected to environmental justice critiques. Embedding a pollution transport model within a program evaluation framework, we find that while the environmental justice gap was widening prior to 2013, it has since fallen by 21-30% across pollutants due to the cap-and-trade policy.
Kyle Meng, Associate Professor at the Bren School of Environmental Management and the Department of Economics and Danae Hernandez Cortes, Economics Ph.D. candidate