Regulators in the Los Angeles air basin have developed an emissions trading program that represents a bold departure from the traditional ‘command and control’ approach to air quality. The program is called the Regional Clean Air Incentives Market (RECLAIM), an acronym designed to emphasize the objectives of reclaiming both good air quality and a sound economy. The program was approved by the South Coast Air Quality Management District (SCAQMD) in October 1993, after a regulatory development period that lasted almost three years. RECLAIM began operation in January 1994.

This chapter begins with background on regulation of air quality in the United States and the Los Angeles air basin along with information on potential cost savings from RECLAIM. The bulk of the chapter consists of discussions of key issues that arose as the theory of emissions trading was turned into a concrete program in RECLAIM. The final section provides some conclusions and implications for future emissions trading proposals.

This paper was published in Pollution for Sale: Emissions Trading and Joint Implementation, S. Sorrell and J. Skea (Eds.), London: Edward Elgar, 1999.