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Environmental cost-benefit analysis of alternative timing strategies in greenhouse gas abatement: A data envelopment analysis approach

  • Kuosmanen, Timo
  • Bijsterbosch, Neil
  • Dellink, Rob

Assessing the benefits of climate policies is complicated due to ancillary benefits: abatement of greenhouse gases also reduces local air pollution. The timing of the abatement measures influences both the economic costs and ancillary benefits. This paper conducts efficiency analysis of ten alternative timing strategies, taking into account the ancillary benefits. We apply the approach by Kuosmanen and Kortelainen [Valuing Environmental Factors in Cost-Benefit Analysis Using Data Envelopment Analysis, Ecological Economics 62 (2007), 56-65], which does not require prior valuation of the environmental impacts. The assessment is based on synthetic data from a dynamic applied general equilibrium model calibrated to The Netherlands. Our assessment shows that if one is only interested in GHG abatement at the lowest economic cost, then equal reduction of GHGs over time is preferred. If society is willing to pay a premium for higher ancillary benefits, an early mid-intensive reduction strategy is optimal.

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Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 68 (2009)
Issue (Month): 6 (April)
Pages: 1633-1642

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Handle: RePEc:eee:ecolec:v:68:y:2009:i:6:p:1633-1642
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolecon

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  1. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
  2. Yaisawarng, Suthathip & Klein, J Douglass, 1994. "The Effects of Sulfur Dioxide Controls on Productivity Change in the U.S. Electric Power Industry," The Review of Economics and Statistics, MIT Press, vol. 76(3), pages 447-60, August.
  3. Laurens Cherchye & Knox Lovell & Wim Moesen & Tom Van Puyenbroeck, 2005. "One Market, One Number? A Composite Indicator Assessment of EU Internal Market Dynamics," Public Economics Working Paper Series ces0513, Katholieke Universiteit Leuven, Centrum voor Economische Studiën, Working Group Public Economics.
  4. Kuosmanen, Timo & Kortelainen, Mika, 2007. "Valuing environmental factors in cost-benefit analysis using data envelopment analysis," Ecological Economics, Elsevier, vol. 62(1), pages 56-65, April.
  5. William L. Weber & Bruce Domazlicky, 2001. "Productivity Growth and Pollution in State Manufacturing," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 195-199, February.
  6. Norman Keith Womer & Homee Shroff & Thomas Gulledge & Kingsley Haynes, 2003. "Measuring efficiency with a linear economic model," Applied Economics, Taylor & Francis Journals, vol. 35(13), pages 1459-1467.
  7. Rob B. Dellink & Marjan W. Hofkes, 2006. "The Timing of National Greenhouse Gas Emission Reductions in the Presence of Other Environmental Policies," Working Papers 2006.17, Fondazione Eni Enrico Mattei.
  8. Mika Kortelainen & Timo Kuosmanen, 2007. "Eco-efficiency analysis of consumer durables using absolute shadow prices," Journal of Productivity Analysis, Springer, vol. 28(1), pages 57-69, October.
  9. Valentina Bosetti & Barbara Buchner, 2005. "Using Data Envelopment Analysis to Assess the Relative Efficiency of Different Climate Policy Portfolios," Working Papers 2005.82, Fondazione Eni Enrico Mattei.
  10. Fare, Rolf & Grosskopf, Shawna & Tyteca, Daniel, 1996. "An activity analysis model of the environmental performance of firms--application to fossil-fuel-fired electric utilities," Ecological Economics, Elsevier, vol. 18(2), pages 161-175, August.
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