Raúl O'Ryan

A CGE framework to evaluate policy options for reducing air pollution emissions in Chile

Successful economic growth in Chile based on open market and export strategy, is characterized by a high dependence on natural resources, and by polluting production and consumption patterns. There is an increasing concern about the need to make potentially significant trade-offs between economic growth and environmental improvements. Additionally, policy makers have been reluctant to impose standards that could have regressive consequences, making the poor poorer. Using the CGE model ECOGEM-Chile we study the direct and indirect effects of imposing environmental taxes in Chile for PM-10 as well as taxes on fuels. We analyze the effects over macroeconomic variables as well as sectoral, distributive, and environmental variables. The results show that the most significant impacts are on emissions and sectoral outputs. There are winners and losers. Macroeconomic and distributional impacts are low when low emission reductions are required, however they can be significant if a 50% reduction in emissions are imposed.

Growth, equity, and the environment in Chile: Issues and evidence

Abstract Chile has grown at an annual rate of 7% over the past decade. Income distribution, however, deteriorated for the poor and middle class before the economy reached full capacity, when real wages began to rise and unemployment to fall. Growth has been export-led, putting pressure on stocks of native forests and fishery and mining resources. Environmental quality worsened before 1990. Reversing these trends would require extra investments on the order of 1% of GDP over many years.

The Use of Probabilistic Analysis to Improve Decision-Making in Environmental Regulation in a Developing Context: The Case of Arsenic Regulation in Chile

ABSTRACT Using probabilistic analysis may be very useful for risk management in developing countries, where information, resources, and technical expertise are often scarce. Currently, most regulatory agencies recommend using deterministic approaches for the analysis of problems relating to decision-making. However, this approach does not incorporate uncertainty in the variables, nor the propagation of uncertainty through the different processes in which they are involved. The complexity of the problem is therefore arbitrarily reduced, and valuable information that could be useful for proposing realistic policies is not considered. This article compares the results of a deterministic analysis with those of a probabilistic one for regulating arsenic in Chile, and differences are established for public policy as a result of building uncertainty into the analysis. It is concluded that the use of a deterministic approach can lead to higher risks than necessary and that probabilistic results can help the regulator negotiate stricter standards. Alternatively, the regulator may end up imposing much higher costs to sources than originally expected as these will be forced to use expensive technology to comply consistently with a given standard.