Richard D. Morgenstern

Ancillary human health benefits of improved air quality resulting from climate change mitigation

BackgroundGreenhouse gas (GHG) mitigation policies can provide ancillary benefits in terms of short-term improvements in air quality and associated health benefits. Several studies have analyzed the ancillary impacts of GHG policies for a variety of locations, pollutants, and policies. In this paper we review the existing evidence on ancillary health benefits relating to air pollution from various GHG strategies and provide a framework for such analysis.MethodsWe evaluate techniques used in different stages of such research for estimation of: (1) changes in air pollutant concentrations; (2) avoided adverse health endpoints; and (3) economic valuation of health consequences. The limitations and merits of various methods are examined. Finally, we conclude with recommendations for ancillary benefits analysis and related research gaps in the relevant disciplines.ResultsWe found that to date most assessments have focused their analysis more heavily on one aspect of the framework (e.g., economic analysis). While a wide range of methods was applied to various policies and regions, results from multiple studies provide strong evidence that the short-term public health and economic benefits of ancillary benefits related to GHG mitigation strategies are substantial. Further, results of these analyses are likely to be underestimates because there are a number of important unquantified health and economic endpoints.ConclusionRemaining challenges include integrating the understanding of the relative toxicity of particulate matter by components or sources, developing better estimates of public health and environmental impacts on selected sub-populations, and devising new methods for evaluating heretofore unquantified and non-monetized benefits.

The Cost of Environmental Protection

Reported expenditures for environmental protection are often cited as an assessment of the burden of current regulatory efforts. However, the potential for both incidental savings and uncounted costs means that the actual burden could be either higher or lower than these reported values. Using a production cost model that considers the possible interaction between environmental and non-environmental expenditures, we directly estimate the dollar-for-dollar incidental savings/uncounted costs arising from a one-dollar increase in reported environmental expenditures. Although recent literature supports the idea that reported expenditures probably understate the actual burden, we find no such evidence in the manufacturing sector based on a large panel of plant-level data. In one industry, we find statistically significant overstatement. In three others, we find no significant deviation in either direction. We conclude that, although cost estimates are not overstated on average, variation and uncertainty exist at the industry level, with some plants experiencing savings and others possibly facing uncounted burdens.

Soft and Hard Price Collars in a Cap-and-Trade System: A Comparative Analysis

We use a stochastic dynamic framework to compare price collars (price ceilings and floors) in a cap-and-trade system with uncertainty in the level of baseline emissions and costs. We consider soft collars, which provide limited volume of additional emission allowances (a reserve) at the price ceiling, and hard collars, which provide an unlimited supply of additional allowances, thereby preventing allowance prices from exceeding the price ceiling. Conversely, allowances are removed from the market if prices fall to the floor. We find that increasing the size of the reserve strictly lowers expected net present values of compliance costs; however, there is a diminishing effect as the allowance reserve is expanded. Most of the expected cost savings are achieved with a modest reserve. Consequently, a rather limited soft price collar could provide considerable assurance about cost while preventing the possibility that emissions could spiral out of control.

A Proposal for Credible Early Action in US Climate Policy

As international negotiations on climate change continue, momentum is building for domestic “early action” to begin reducing US emissions of greenhouse gases in the nearer term. With unopposed Senate ratification of the Framework Convention on Climate Change (FCCC) in 1992, the US and other Parties are already committed to adopt policies and measures to limit these emissions.

Impact of Carbon Price Policies on U.S. Industry

This paper informs the discussion of carbon price policies by examining the potential for adverse impacts on domestic industries, with a focus on detailed sector-level analysis. The assumed policy scenario involves a unilateral economy-wide

The near-term impacts of carbon mitigation policies on manufacturing industries

10/ton CO2 charge without accompanying border tax adjustments or other complementary policies. Four modeling approaches are developed as a proxy for the different time horizons over which firms can pass through added costs, change input mix, adopt new technologies, and reallocate capital. Overall, we find that a readily identifiable set of industries experience particularly adverse impacts as measured by reduced output and that the relative burdens on different industries are remarkably consistent across the four time horizons. Output rebounds considerably over longer time horizons, and the adverse impacts on profits diminish even more rapidly in most cases. Over the short term employment losses mirror output declines, while gains in other industries fully offset the losses over the longer horizons. At the same time, leakage abroad is considerable in some sectors, particularly when reductions in exports are considered.

Economic Incentives Versus Command and Control: What’s the Best Approach for Solving Environmental Problems?

Who will pay for new policies to reduce carbon dioxide and other greenhouse gas emissions in the United States? This paper considers a slice of the question by examining the near-term impact on domestic manufacturing industries of both upstream (economy-wide) and downstream (electric power industry only) carbon mitigation policies. Detailed Census data on the electricity use of four-digit manufacturing industries is combined with input-output information on interindustry purchases to paint a detailed picture of carbon use, including effects on final demand. This approach, which freezes capital and other inputs at current levels and assumes that all costs are passed forward, yields upper-bound estimates of total costs. The results are best viewed as descriptive of the relative burdens within the manufacturing sector rather than as a measure of absolute costs. Overall, the principal conclusion is that within the manufacturing sector (which by definition excludes coal production and electricity generation), only a small number of industries would bear a disproportionate short-term burden of a carbon tax or similar policy. Not surprisingly, an electricity-only policy affects very different manufacturing industries than an economy-wide carbon tax.

The Ancillary Carbon Benefits of SO2 Reductions from a Small-Boiler Policy in Taiyuan, PRC

Now, decades after the first environmental laws were passed in this country, policymakers face many choices when seeking to solve environmental problems. Will taxing polluters for their discharges be more effective than fining them for not meeting certain emission standards? Will a regulatory agency find it less costly to enforce a ban or oversee a system of tradable permits? Which strategy will reduce a pollutant the quickest?

The Initial Incidence of a Carbon Tax Across Income Groups

Proposals for greenhouse-gas reductions have been met with widespread skepticism in the developing world, in part because such countries find their conventional air-pollution problems more pressing. The goal of this article is to examine whether reductions in carbon emissions that are ancillary to conventional pollutant reductions from a policy to phase out small boilers in down-town Taiyuan, China are large enough to make such policies attractive carbon-reducing investments to developed countries. Based on the authors’ survey data, there are significant carbon benefits (on the order of 50% to 95% reduction) associated with this policy, with large reduction potential elsewhere in China. Although the cost for boilers that switched out of coal was almost U.S.

The Initial Incidence of a Carbon Tax Across US States

2,900 per ton of SO 2 reduced, these ancillary carbon reductions are free from a social perspective. Such initiatives represent a potentially significant source of carbon reductions that developed countries could help pay for, bringing significant health and other benefits to the country.