Business Notes Pollution L.A.

How much is clean air worth on the open market? Industries in Southern California will soon find out. The South Coast Air Quality Management District voted 8 to 1 last week to prepare an innovative plan that takes a market-based instead of regulatory approach toward cleaning up the dirtiest air in the nation. While the same concept will be tried under the federal Clean Air Act to reduce sulfur-dioxide emissions from electric power plants in the Midwest, California's Regional Clean Air Incentives Market program (RECLAIM) is the most ambitious attempt so far to cut urban air pollution. Under the plan, businesses will be issued shares in the region's overall emissions, and together they must reduce smog-forming hydrocarbons by 5.8% a year, nitrogen oxides by 8% and sulfur dioxide by 8.5%. Companies that exceed the reductions can sell emission "credits" to other firms. The market covers 2,800 businesses that account for one-fourth of the pollution in Los Angeles, Riverside, San Bernardino and Orange counties.

Proponents estimate that treating smog as a commodity will save businesses almost half a billion dollars a year in smog controls while enabling them to cut emissions. Critics of the policy warn that inadequate monitoring and enforcement could undermine the region's goal of achieving clean air by 2010. But they approve of the innovative approach. Trading is expected to begin next year.