Abatement and Marginal Abatement Cost (MAC)

Abatement is the total reduction in toxic emissions; Marginal Abatement Cost (MAC) reflects the cost of one additional unit or ton of pollution that is abated, or not emitted. The MAC of each additional unit is always increasing, with a steep jump as the firm gets closer to the elimination of last remnants of pollution. Most firms have a certain cutoff point after which abatement is no longer feasible as it increases to infinity. Thus, substantial abatement at minimal cost occurs during the initial abatement phase. Another key point is that MAC varies significantly with different pollutants, and even differs between firms with the same emitted pollutant (Hanley, 252). The nature of MAC also adds a benefit to pollution-control regulations. Because of the low cost of initial abatement, the heaviest polluting firms also tend to be the largest contributors to the reduction in pollution. This characteristic of the program, combined with the banking for future use provision, can lead to significant pollution abatement right at start up.

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