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Climate Policy without Tears CGE-Based Ancillary Benefits Estimates for Chile

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  • Sébastien Dessus
  • David O'Connor
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    Abstract

    This study examines a hithertoneglected set of benefits from climate policy,viz., the reduction in emissions of localair pollutants and the associated healthbenefits, in this case for residents ofSantiago de Chile. By using an economy-widemodel, we are able to compare these monetisedbenefits to the direct costs of carbonabatement, thereby determining the scope for “no regrets” CO 2 reductions. Sensitivityanalysis is performed in recognition of theuncertainty surrounding certain key parameterand exogenous variable values – notably,households' willingness to pay (WTP) forreduced mortality and morbidity risk, and thesubstitution elasticities among energy sourcesand between energy and other inputs. Ourresults suggest that, even with the mostconservative assumptions (low WTP, lowelasticities), Chile could reduce CO 2emissions by almost 20% from the 2010 baselinewith no net welfare loss, though a 10%reduction is closer to “optimal”. If insteadChile were to target a 20% reduction inparticulate concentrations, a particulate taxwould incur slightly lower costs than anequivalent carbon tax to achieve the samehealth benefits. While the latter is asecond-best method of addressing localpollution, the welfare loss of choosing thisinstrument could be fully compensated by carboncredit sales at a world market price of$20/tC. Copyright Kluwer Academic Publishers 2003

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    File URL: http://hdl.handle.net/10.1023/A:1024469430532
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    Bibliographic Info

    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 25 (2003)
    Issue (Month): 3 (July)
    Pages: 287-317

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    Handle: RePEc:kap:enreec:v:25:y:2003:i:3:p:287-317

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    Web page: http://www.springerlink.com/link.asp?id=100263

    Related research

    Keywords: ancillary benefits; carbon tax; CGE modelling; climate change; “no regrets” abatement;

    References

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    17. Sébastien Dessus & David O’Connor, 1999. "Climate Policy Without Tears: CGE-Based Ancillary Benefits Estimates for Chile," OECD Development Centre Working Papers 156, OECD Publishing.
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    Citations

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    Cited by:
    1. Pittel, Karen & Rübbelke, Dirk T. G., 2008. "Climate policy and ancillary benefits: A survey and integration into the modelling of international negotiations on climate change," Munich Reprints in Economics 19350, University of Munich, Department of Economics.
    2. Caspary, Georg, 2009. "Gauging the future competitiveness of renewable energy in Colombia," Energy Economics, Elsevier, vol. 31(3), pages 443-449, May.
    3. Stephen P. Holland, 2011. "Spillovers from Climate Policy to Other Pollutants," NBER Chapters, in: The Design and Implementation of U.S. Climate Policy, pages 79-90 National Bureau of Economic Research, Inc.
    4. Dorothée Boccanfuso & Luc Savard & Antonio Estache, 2013. "The Distributional Impact of Developed Countries’ Climate Change Policies on Senegal: A Macro-Micro CGE Application," Sustainability, MDPI, Open Access Journal, vol. 5(6), pages 2727-2750, June.
    5. Michael Finus & Dirk T.G. Rübbelke, 2008. "Coalition Formation and the Ancillary Benefits of Climate Policy," Working Papers 2008.62, Fondazione Eni Enrico Mattei.
    6. Thierry Mayer, 2006. "Policy Coherence for Development : A Background paper on Foreign Direct Investment," Sciences Po publications 253, Sciences Po.
    7. Michael Finus & Dirk Rübbelke, 2013. "Public Good Provision and Ancillary Benefits: The Case of Climate Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(2), pages 211-226, October.
    8. Dorothée Boccanfuso & Antonio Estache & Luc Savard, 2009. "Distributional impact of developed countries CC policies on Senegal : A macro-micro CGE application," Cahiers de recherche 09-11, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
    9. Dorothée Boccanfuso & Antonio Estache & Luc Savard, 2008. "Intra-Country Distributional Impact of Policies to Fight Climate Change: A Survey," Working Papers ECARES 2008_038, ULB -- Universite Libre de Bruxelles.
    10. Henning Jensen & Marcus Keogh-Brown & Richard Smith & Zaid Chalabi & Alan Dangour & Mike Davies & Phil Edwards & Tara Garnett & Moshe Givoni & Ulla Griffiths & Ian Hamilton & James Jarrett & Ian Rober, 2013. "The importance of health co-benefits in macroeconomic assessments of UK Greenhouse Gas emission reduction strategies," Climatic Change, Springer, vol. 121(2), pages 223-237, November.
    11. Dorothée Boccanfuso & Antonio Estache & Luc Savard, 2008. "Distributional impact of global warming environmental policies: A survey," Cahiers de recherche 08-14, Departement d'Economique de la Faculte d'administration à l'Universite de Sherbrooke.
    12. Dorothee Boccanfuso & Antonio Estache & Luc Savard, 2011. "The Intra-country Distributional Impact of Policies to Fight Climate Change: A Survey," Journal of Development Studies, Taylor & Francis Journals, vol. 47(1), pages 97-117.
    13. Stephen P. Holland, 2010. "Spillovers from Climate Policy," NBER Working Papers 16158, National Bureau of Economic Research, Inc.
    14. Cao, Jing & Ho, Mun & Jorgenson, Dale, 2008. "“Co-benefits” of Greenhouse Gas Mitigation Policies in China: An Integrated Top-Down and Bottom-Up Modeling Analysis," Discussion Papers dp-08-10-efd, Resources For the Future.

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