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

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  • Sébastien Dessus
  • David O'Connor

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 2 emissions 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

Suggested Citation

  • Sébastien Dessus & David O'Connor, 2003. "Climate Policy without Tears CGE-Based Ancillary Benefits Estimates for Chile," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(3), pages 287-317, July.
  • Handle: RePEc:kap:enreec:v:25:y:2003:i:3:p:287-317 DOI: 10.1023/A:1024469430532
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    References listed on IDEAS

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    Cited by:

    1. Michael Finus & Dirk T.G. Rübbelke, 2008. "Coalition Formation and the Ancillary Benefits of Climate Policy," Working Papers 2008.62, Fondazione Eni Enrico Mattei.
    2. 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 l'École de gestion à l'Université de Sherbrooke.
    3. 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.
    4. Prashant Bharadwaj & Matthew Gibson & Joshua Graff Zivin & Christopher Neilson, 2017. "Gray Matters: Fetal Pollution Exposure and Human Capital Formation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, pages 505-542.
    5. Yingying Lu & David I. Stern, 2016. "Substitutability and the Cost of Climate Mitigation Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(1), pages 81-107, May.
    6. 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 1-24, June.
    7. Thierry Mayer, 2006. "Policy Coherence for Development: A Background Paper on Foreign Direct Investment," OECD Development Centre Working Papers 253, OECD Publishing.
    8. Caspary, Georg, 2009. "Gauging the future competitiveness of renewable energy in Colombia," Energy Economics, Elsevier, vol. 31(3), pages 443-449, May.
    9. 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.
    10. 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," Ecological Economics, Elsevier, vol. 68(1-2), pages 210-220, December.
    11. Mardones D., Cristián, 2012. "Chile: building a computable general equilibrium model with an application to the Bío Bío region," Revista CEPAL, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL), April.
    12. Takeshita, Takayuki, 2012. "Assessing the co-benefits of CO2 mitigation on air pollutants emissions from road vehicles," Applied Energy, Elsevier, pages 225-237.
    13. Michael Finus & Dirk Rübbelke, 2013. "Public Good Provision and Ancillary Benefits: The Case of Climate Agreements," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(2), pages 211-226, October.
    14. Mrkajic, Vladimir & Vukelic, Djordje & Mihajlov, Andjelka, 2015. "Reduction of CO2 emission and non-environmental co-benefits of bicycle infrastructure provision: the case of the University of Novi Sad, Serbia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 232-242.
    15. Simin SEURY, "undated". "Inward Foreign Investment, Corruption and Firm's Ability: Firm-level Evidence from the Transition Economies," EcoMod2009 21500083, EcoMod.
    16. Stephen P. Holland, 2010. "Spillovers from Climate Policy," NBER Working Papers 16158, National Bureau of Economic Research, Inc.
    17. 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.
    18. 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.
    19. 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.
    20. 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 l'École de gestion à l'Université de Sherbrooke.

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