Tradable permit system for PM2.5 emissions from residential and industrial sources

Residential wood combustion is a significant source of air pollution in urban areas of many countries with cold weather and low cost of firewood. These conditions worsen in urban areas where atmospheric emissions from industrial activities are present. This study addresses this problem and extends the existing literature to develop an optimization model that simulates a system of tradable permits for fine particulate matter emissions, which includes different options to reduce emissions for both industrial and residential sources. Results show that replacing wood heaters in urban areas is highly desirable from an economic and environmental perspective regardless if the expenses originate from each household, public programs or emission compensation mechanisms from the industrial sector.