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Use of Aggregate Emission Reduction Cost Functions in Designing Optimal Regional SO2 Abatement Strategies

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  • Mariam, Yohannes
  • Barre, Mike

Abstract

The 1990 Canadian long-range transport of air pollutants and acid deposition report divided North America into 40 sources of emission and 15 sensitive receptor sites. For the purpose of national policy making and international negotiation, the use of these large sources and few receptors may prove adequate. Due to inadequate information regarding cost of reducing emissions from each point source, it was felt necessary to design a method to generate cost functions for emission regions. The objective of this study was to develop aggregate cost functions that relate the cost of SO2 emission reductions to the amount of reduction achieved. The cost curves generated presume the application of control technologies to achieve a mandated regional emission reduction in the year 2000. The study has also assumed that trading will take place among plants within a region. The emissions inventories (GECOT and AIRS for the USA and RDIS for Canada) were used as the major source of data for the study. Cost functions were derived for forty emission regions. The functional forms that best fits estimated costs are either quadratic, power or linear in specifications. Furthermore, the cost functions indicted substantial variation (differences in marginal costs of removal) across emission regions. Preliminary analysis using Environment Canada’s Integrated Assessment Modelling platform indicated that strategies that make use of these functions and environmental goals will cost the industry and government the minimum amount compared to those that relay on quantitative emission reductions. Considering the findings of studies that indicated exposure of several watersheds to excess depositions of SO2 compared to critical loads, policy makers should examine ways of reducing emissions beyond what is already committed for the year 2005 or 2010. Future work will investigate interregional trading, especially between the bordering states of the USA and provinces of Canada based on these cost functions.

Suggested Citation

  • Mariam, Yohannes & Barre, Mike, 1997. "Use of Aggregate Emission Reduction Cost Functions in Designing Optimal Regional SO2 Abatement Strategies," MPRA Paper 659, University Library of Munich, Germany, revised 06 Jun 1997.
  • Handle: RePEc:pra:mprapa:659
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    File URL: https://mpra.ub.uni-muenchen.de/659/1/MPRA_paper_659.pdf
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    Cited by:

    1. Paunić, Alida, 2016. "Brazil, Preservation of Forest and Biodiversity," MPRA Paper 71462, University Library of Munich, Germany.

    More about this item

    Keywords

    Canada; long-range transport; air pollutants; acid deposition; North America; sources-receptors; negotiation; cost; emissions; cost functions; SO2; cost curves; control technologies; Integrated Assessment Modelling; USA;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q57 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Ecological Economics
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation
    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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