Making the most of the 'California effect': Costs and effectiveness of policy alternatives for transport-related air pollution management

Vogel (1997) argues, contrary to the pessimistic view that economic competition will lead to a 'race to the bottom', that evidence suggests that societies with laxer environmental standards actually do catch up with those with stricter standards. California's auto emission standards and how these stringent rules have spread to other countries comprise the core of his numerous examples. This paper takes a cautious look at the desirability of what he calls 'California effect', namely, importing quality standards or specific regulatory measures from a 'greener' nation. This cautiousness comes from considering the costs of regulating risk in search of safer society. The paper compares cost characteristics of selected policy measures and shows that California's strategy is not cost-effective, if politically sensible in its own context. The implication is that societies faced with different socio-politico-economic characteristics may benefit from not copying California's strategy. It takes a view that policy transferability is relatively limited in the area of air pollution and argues not only air quality standards but also policy measures to achieve those standards should be determined at the national or subnational level. The paper also discusses inextricable problems associated with measuring cost-effectiveness and suggests a few ways to avoid meaningless comparison or misleading conclusions in using extremely varying estimates. It does not attempt a cost-effectiveness analysis of an exhaustive set of control measures, which would be convenient for decision-making but seriously misleading. Rather, it attempts to provide information and ideas that might be useful to policy makers faced with the task of developing their own mobile source control strategies outside California.