Ecological EconomicsLecture 10

Tiago DomingosAssistant Professor

Environment and Energy SectionDepartment of Mechanical Engineering

Doctoral Program and Advanced Degree in Sustainable Energy SystemsDoctoral Program in Mechanical Engineering

Doctoral Program in Environmental Engineering

• Models point to measure emissions at the – Marginal cost of abatement (MCA), or

– Marginal social cost (MSC) = Marginal benefit of abatement (MBA), a.k.a. Marginal Damage Costs (MDC)

• Measurement away from the optimum– c, over-polluting (assumed current state) => a is upper bound

– d, under-polluting => b is lower bound

Social costs vs Marginal abatement

Constant MDC

• Use the marginal damage per tonne of emission estimated in the CAFE-CBA project.

– Pollutants: sulphur dioxide (SO2), nitrogen oxides (NOx), particulate matter (PM2.5), ammonia (NH3) and volatile organic compounds (VOC).

• Assess the costs and benefits of air pollution policies, and conduct analysis of scenarios.

• Impacts considered:– Exposure to PM2.5 and ozone

– Health damages of PM2.5 (both acute and chronic effects) and ozone, O3 (only acute). Both long-term (chronic) and short-term (acute). Both mortality (i.e. deaths) and morbidity (i.e. illness)

• Most important health damages relate to mortality, restricted activity days and chronic bronchitis.

CAFE-CBA

• Regarding the effects of each pollutant on PM2.5 concentration:

CAFE-CBA

• Regarding the effects of each pollutant on O3 concentration:

CAFE-CBA

• Impacts quantified in monetary units. Beware of double counting.

CAFE-CBA

• Impacts omitted from the analysis.

CAFE-CBA

• Modelling and valuing of a uniform relative (?) reduction in emissions within each country.

• A change of 1000 t of each pollutant causes changes in concentration of PM2.5 and O3 in Europe.

• This regards a 15% emission reduction (the last 15%) of SO2, NOx, NH3, VOCs and PM2.5 at the emission level of current legislation in 2010.

CAFE-CBA – Marginal costs

Impact Pathway Aproach

• Quantification of emissions

• Description of pollutant dispersion across Europe (grid 50 x 50 km)

• Quantification of exposure of people, environment and buildings that are affected by air pollution;

– Source-receptor functions

• Quantification of the impacts of air pollution– Health damages, damages to crops and to buildings

• Valuation of the impacts

• Description of uncertainties

CAFE-CBA

• Evaluate the impacts on health of air pollution, concentrating on the two main pollutants of concern to CAFE – PM and ozone.

• Monetization of chronic mortality in terms of changing longevity (years of life lost), i.e., Value of a Life Year (VOLY).

• Premature mortality due to air pollution is valued in terms of the Value of a Statistical Life (VSL).

• VSL involves dividing some estimate of the WTP for a mortality risk reduction by that risk reduction.

• VOLY involves dividing some estimate of the willingness to pay (WTP) for an improvement in life expectancy by that life expectancy improvement.

– VOLYs have been computed mainly through computational adjustments of existing VSL

CAFE-CBA – Health Damages

• VSL can be multiplied by the statistical deaths averted by a policy to arrive at the benefits of that policy.

• Variation in the method used to value mortality

CAFE-CBA – Health Damages

• Marginal PM2.5 damage (€) per tonne emission for 2010

– 3 sets of sensitivity analysis

• Quantification of ozone effects on mortality should use the metric SOMO35 (sum of means over 35 ppb)

– relationship of daily ozone with daily mortality should be restricted to quantifying the effects at concentrations greater than 35ppb daily maximum 8-hr mean, on days when the daily maximum 8-hr mean exceeded that level.

CAFE-CBA – Health Damages