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Ancillary Benefits of Reduced Air Pollution in the United States from Moderate Greenhouse Gas Mitigation Policies in the Electricity Sector

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  • Burtraw, Dallas

    ()
    (Resources for the Future)

  • Palmer, Karen

    ()
    (Resources for the Future)

  • Krupnick, Alan

    ()
    (Resources for the Future)

  • Toman, Michael
  • Paul, Anthony
  • Bloyd, Cary

Abstract

This paper considers how moderate actions to slow atmospheric accumulation of greenhouse gases from fossil fuel use also could reduce conventional air pollutants in the United States. The benefits that result would be “ancillary” to greenhouse gas abatement. Moreover, the benefits would tend to accrue locally and in the near term, while benefits from reduced climate change mostly accrue globally and over a time frame of several decades or longer. The previous literature suggests that changes in nitrogen oxides (NOx) would be the most important consequence of moderate carbon policies. We calculate these changes in a detailed electricity model linked to an integrated assessment framework to value changes in human health. A tax of $25 per metric ton of carbon emissions would yield NOx related health benefits of about $8 per metric ton of carbon reduced in the year 2010 (1997 dollars). Additional savings accrue from reduced investment in NOx and SO2 abatement in order to comply with emission caps. These savings sum to $4-$7 per ton of carbon reduced. Total ancillary benefits of a $25 carbon tax are estimated to be $12-$14, which appear to justify the costs of a $25 tax, although marginal benefits are less than marginal costs. At a tax of $75 per ton carbon, greater health benefits and abatement cost savings are achieved but the value of ancillary benefits per ton of carbon reductions remains roughly constant at about $12.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-01-61-.

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Date of creation: 01 Dec 2001
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Handle: RePEc:rff:dpaper:dp-01-61-

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Keywords: climate change; greenhouse gas; ancillary benefits; air pollution; co-control benefits; nitrogen oxides; sulfur dioxide; carbon dioxide; particulates; health;

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References

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  1. Boyd Roy & Krutilla Kerry & Viscusi W. Kip, 1995. "Energy Taxation as a Policy Instrument to Reduce CO2 Emissions: A Net Benefit Analysis," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 1-24, July.
  2. Banzhaf, H. Spencer & Desvousges, William H. & Johnson, F. Reed, 1996. "Assessing the externalities of electricity generation in the Midwest," Resource and Energy Economics, Elsevier, vol. 18(4), pages 395-421, December.
  3. Krupnick, Alan J. & Burtraw, Dallas, 1996. "The social costs of electricity: Do the numbers add up?," Resource and Energy Economics, Elsevier, vol. 18(4), pages 423-466, December.
  4. Krupnick, Alan & Cropper, Maureen & Alberini, Anna & Heintzelman, Martin & Simon, Nathalie & O'Brien, Bernie & Goeree, Ron, 2000. "Age, Health, and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents," Discussion Papers dp-00-37, Resources For the Future.
  5. Palmer, Karen & Burtraw, Dallas, 1997. "Electricity restructuring and regional air pollution," Resource and Energy Economics, Elsevier, vol. 19(1-2), pages 139-174, March.
  6. Burtraw, Dallas & Krupnick, Alan & Austin, David & Farrell, Deirdre & Mansur, Erin, 1997. "The Costs and Benefits of Reducing Acid Rain," Discussion Papers dp-97-31-rev, Resources For the Future.
  7. Lawrence Goulder, 1995. "Environmental taxation and the double dividend: A reader's guide," International Tax and Public Finance, Springer, vol. 2(2), pages 157-183, August.
  8. Janusz R. Mrozek & Laura O. Taylor, 2002. "What determines the value of life? a meta-analysis," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(2), pages 253-270.
  9. Burtraw, Dallas & Palmer, Karen & Bharvirkar, Ranjit & Paul, Anthony, 2001. "The Effect of Allowance Allocation on the Cost of Carbon Emission Trading," Discussion Papers dp-01-30-, Resources For the Future.
  10. W. Kip Viscusi & Wesley A. Magat & Alan Carlin & Mark K. Dreyfus, 1994. "Environmentally Responsible Energy Pricing," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 23-42.
  11. Anna Alberini & Alan Krupnick & Maureen Cropper & Nathalie Simon & Joseph Cook, 2002. "The Willingness to Pay for Mortality Risk Reductions: A Comparison of the United States and Canada," CESifo Working Paper Series 668, CESifo Group Munich.
  12. Ekins, Paul, 1996. "How large a carbon tax is justified by the secondary benefits of CO2 abatement?," Resource and Energy Economics, Elsevier, vol. 18(2), pages 161-187, June.
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Cited by:
  1. Erin T. Mansur, 2007. "Do Oligopolists Pollute Less? Evidence from a Restructured Electricity Market," NBER Working Papers 13511, National Bureau of Economic Research, Inc.
  2. Chuku Chuku, 2010. "Pursuing an integrated development and climate policy framework in Africa: options for mainstreaming," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 15(1), pages 41-52, January.
  3. Giménez, Eduardo L. & Rodríguez, Miguel, 2010. "Reevaluating the first and the second dividends of environmental tax reforms," Energy Policy, Elsevier, vol. 38(11), pages 6654-6661, November.
  4. Burtraw, Dallas & Pizer, William & Harrington, Winston & Sanchirico, James & Newell, Richard, 2005. "Modeling Economywide versus Sectoral Climate Policies Using Combined Aggregate-Sectoral Models," Discussion Papers dp-05-08, Resources For the Future.

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