1 “The greenhouse effect itself is simple enough to understand and is not in any real dispute. What is in dispute is its magnitude over the coming century, its translation into changes in climates around the globe, and the impact of those climate changes on human welfare and the natural environment.” Thomas C. Schelling, Some Economics of Global Warming

2 Introduction This chapter focuses on two global environmental problems: ozone depletion and global warming. Each is the result of pollutants modifying basic atmospheric chemistry and altering atmospheric processes and function. Each is caused by stock pollutants that persist in the atmosphere for long periods (up to 100 years) after their emission into the atmosphere. Each is global in the sense that the environmental problem is independent of location of emissions. And in each case, there is potential for significant global environmental change and significant impacts on social, economic, and ecological systems.

3 Introduction It is much more difficult to estimate a damage function for these types of pollutants than for conventional pollutants.  The only way to increase the number of observations for use in statistical analysis is to observe changes over time.  Because these pollutants persist through time, it is very important to calculate the damages that current emissions will generate in the future. While there is no need to account for geographic variability in the effects of emissions, it also means that this problem can not be dealt with by one country.

4 The Depletion of the Ozone Layer The basic problem leading to depletion of the ozone layer is the emission of a set of chemicals that trigger a reaction in the atmosphere, causing ozone to be converted to oxygen. Ozone blocks ultraviolet radiation, oxygen does not. As Figure 7.1 illustrates, the stratosphere (outer layer of atmosphere) is separated from the troposphere (lower atmosphere) by the tropopause. The lowest level of the stratosphere is warmer than the highest level of the troposphere and there is little mixing of air across this temperature inversion. Pollutions that make their way to the stratosphere tend to stay there.

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6 Causes of Ozone Depletion The pollutants that most adversely affect the ozone layer are fluorocarbons, particularly those that contain chloride and bromide. Most of the depletion of the ozone layer has been attributed to pollutants containing chloride (chlorofluorocarbons or CFCs). CFCs were used in refrigeration and air conditioning systems and as propellants in spray cans. These chemicals serve as a catalyst in a chemical reaction that converts ozone to oxygen. The presence of ice crystals accelerates the process. CFCs are not consumed in the reaction but remain in the stratosphere to continue the destruction of the ozone.

7 Consequences of the Depletion of the Ozone Layer Ozone in the upper atmosphere performs the critical function of blocking the penetration of ultraviolet light. Ultraviolet radiation causes living cells to mutate. In Oct. 1991, a panel of international scientists found there had been a 3 % reduction in stratospheric ozone, which lead to a 6% increase in the amount of ultraviolet radiation striking the earth’s surface. This increase in radiation had the potential to lead to an additional 12 million cases of skin cancer in the US over the next 50 years.

8 Consequences of the Depletion of the Ozone Layer Agricultural yields could be significantly reduced. Phytoplankton, which form the foundation of the oceanic food web, undergo several metamorphoses before achieving adult form and are very vulnerable to increased ultraviolet radiation. Ultraviolet radiation also accelerates the deterioration of materials such as plastics and nylon.

9 Policy toward Ozone Depletion The first policy the US adopted was not tied to an international agreement. This 1977 policy banned the use of CFCs as a propellant in spray cans of deodorants, hair sprays, and other consumer products. While command and control regulations are not usually efficient, this involved a substance with a readily available substitute and as a result, the cost of eliminating these emissions was low compared to the damages created.

10 Policy toward Ozone Depletion In the 1980’s the discovery of the hole in the ozone layer above the Antarctic and evidence of continued ozone depletion spurred the development of an international agreement on chemicals. In 1987, the Montreal Protocol on Substances that Deplete the Ozone Layer was signed by most developed and developing countries. An important remaining issue is how to treat replacements for CFCs which also have ozone-depleting effects.

11 Policy toward Ozone Depletion The Montreal Protocol has been successful for a number of reasons, but primarily because the cost of compliance was very low compared to the damages that would occur. Costs were low because of the existence of good substitutes.