1. 120 juni 2015 NewExt – Work Package 3 VALUATION OF ENVIRONMENTAL IMPACTS OF ACIDIFICATION AND EUTROPHICATION BASED ON THE STANDARD-PRICE APPROACH PSI - VILLIGEN

2. 220 juni 2015 Definition of problem Impact category airborne pollutants NO x SO 2 PMNH 3 VOC Greenhouse gasses Human health nitrates ozone direct, sulphates nitrates /sulphates via ozone c Crops via ozone direct -- via ozone c Materials / buildings - direct included in SO 2 impacts --c Ecosystems ACID EUTRO ACID EUTRO via ozone Amenity------

3. 320 juni 2015 Standard Price approach Ct1 Marginal abatement costs Implicit marginal damage costs = perceived benefits Ec Et1 Et2 Costs/ Benefits (EUR/ton) Emissions (tonnes) SHADOW PRICE

4. 420 juni 2015 STEP 3 STEP 1 STEP 2 Emissions technology / location WTP for protection of ecosystems - EU15 and Europe perspective (In €/ha protected) SHADOW PRICE of impact on ecosystems (in €/ton emission) Marginal impacts : Exceedance of critical loads (in ha critical loads exceeding / ton emission) APPROACH of ANALYSIS

5. 520 juni 2015 EMISSIONS : estimated tonnes of SO 2, NO X and NH 3 emissions in year 2003 for :  All EU15 member states [ktonne]  All the other European countries [ktonne] STEP 1 : physical impacts IMPACTS : Marginal impacts of SO 2, NO X and NH 3 emissions in one country on area ecosystems protected from acidification and eutrophication in other countries. [ha/tonne] EMEP Krewitt. et al. (provisional)

6. 620 juni 2015  European BAU scenario, calculated in RAINS model by IIASA (REF)  UNECE Gothenburg Protocol of LRTAP convention of 1999 (PRO)  Directive 2001/81/EC on National Emission Ceilings of 2001 (NEC) STEP 2 : DETERMINATION OF WTP EMISSION REDUCTION TARGETS for year 2010 Willingness To Pay per hectare ecosystem protected [EUR/ha*y]

7. 720 juni 2015 UN-ECE Gothenburg Protocol on LRTAP (1999)  Compromise EU15 countries, other European countries, USA, Canada  Signed by 31 parties, ratified by 4  Goals :  Exceedance CL acid : gap-closure 50%  Exceedance CL eutro : gap-closure 40%  Exceedance AOT40 threshold : - 33%  Exceedance AOT60 threshold : - 67%

8. 820 juni 2015 UNECE Gothenburg Protocol cont.  Keeps account with cost/benefit considerations  Mentions additional benefits : effects on materials, human health (by abatement of PM (aerosols) precursors)  Does not keep account with Kyoto targets  Emission reduction targets : sufficient to reach LT goals (2020) : 100% gap- closure?

9. 920 juni 2015 European NEC directive 2001/81/EC (2001) Initial NEC proposal (NECi) by European Commission :  based on scientific research to meet LT goals in 2020  In favor of NGOs and European Parliament's env. Committee  NECi was found to be too ambitious, rejected by Member States  Role in revision of NEC directive in 2004

10. 1020 juni 2015 EU NEC directive cont. Agreed NEC directive (NECf):  NECf just slightly more ambitious than PRO  Does not keep account with Kyoto targets  Keeps account with cost/benefit considerations  Mentions health effects (PM) but less explicit as PRO

11. 1120 juni 2015 SO 2

12. 1220 juni 2015 NO X

13. 1320 juni 2015 NH 3

14. 1420 juni 2015 WTP range :  NECf and PRO good proxy  NECi upper limit

15. 1520 juni 2015 BENEFITS Quantified benefits for O 3, health, agriculture and building materials [EUR/year]COSTS Abatement cost of sum of SO 2 + NO X + NH 3 emissions for the whole of EU15 and Europe [EUR/year] EMISSION REDUCTION TARGETS (ET) WILLINGNESS TO PAY WILLINGNESS TO PAY FOR ACIDIFICATION AND EUTROPHICATION Abatement costs to protect ecosystems against acidification and eutrophication. Range of WTP determined by targets determined by REF, PRO and NEC. [EUR/year]. Correction!

16. 1620 juni 2015 WTP ACID+EUTRO = pTC - ω*TB O3 - (χ*α*TB[HH] ACID + ψ *ζ*TB[HH] EUTRO ) - (χ*γ*TB[A] ACID +ψ*θ*TB[A] EUTRO ) - χ*δ*TB[BM] ACID - (χ*ε*TB[T] ACID - ψ*ι*TB[T] EUTRO )

17. 1720 juni 2015 1. χ, ψ and ω = 1 : indicates that policy makers perceived acidification, eutrophication and ground-level ozone as equally important topics during negotiations of the multi source-multi pollutant emission reduction programs PRO and NEC 2.pTC = TC : indicates that the policy makers knew the estimated total abatement costs during the negotiations and that they believed this estimation as a correct represented of the real total abatement costs 3. α and ζ = 0 and γ, θ, δ, ε and ι = 1: indicates that the benefits for agriculture, building materials played an equal and deterministic role in the negotiations, while those on human health did not play a deterministic role during the negotiations WTP ACID+EUTRO = TC - TB O3 – (TB[A] ACID +TB[A] EUTRO ) - TB[BM] ACID

18. 1820 juni 2015 WILLINGNESS TO PAY WILLINGNESS TO PAY FOR ACIDIFICATION AND EUTROPHICATION WTP PER HECTARE ECOSYSTEM PROTECTED for the whole of EU15 and Europe according to REF, PRO and NEC [EUR/ha*year] BENEFITS Area ecosystem for which no exceeding of critical loads in EU15 and Europe [ha/year]

19. 1920 juni 2015 2010 : REF, PRO & NEC : "marginal" and average costs per ha protected 0 200 400 600 800 1000 1200 1400 100.000105.000110.000115.000120.000125.000130.000135.000140.000 Area unprotected Ecosystems (acid + eutro ) : 1000 ha Costs : Euro/ha WTP EU15 average WTP EU15- uncorrected WTP EU15 - corrected WTP Europe average WTP Europe - uncorrected WTP Europe - corrected REFNEC iPRONECf Range for WTP Best estimate

20. 2020 juni 2015  Range WTP/hectare :  100 to 350 €/ha*year (for ecosystems protected all over Europe)  300 to 700 €/ha*year (for ecosystems protected solely in the EU15)  Within this range, best estimate around 100 €/ha, to be applied to all ecosystems protected in Europe.  Detailed research on this topic is indispensable, especially on the effects on human health. Questionnaires and interviews with key players will be executed CONCLUSION STEP 2 : WTP

21. 2120 juni 2015 Assumptions : ecological indicators  Choice of physical indicator : number of hectares of ecosystem, for which critical loads for acidification and eutrophication have been exceeded  Sum of exceedance of different types of ecosystems, both terrestrial and aquatic, and sum of impacts of acidification and eutrophication. whole of the EU15 and Europe  The number of hectares of ecosystem for which the critical loads are exceeded are evaluated for the whole of the EU15 and Europe single value  We use a single value for all ecosystems, irrespective of its characteristics and location.

22. 2220 juni 2015 Assumptions : cost indicators RAINS model  Costs as estimated by the technico-economic models (RAINS model) : good indicator for the WTP. Not taking not account : other cost issue as the impact of the measures on economy, employment, distribution of incomes… average costs of a marginal policy package  We do not use marginal costs of single measures but the average costs of a marginal policy package. (average PRO-REF, NECf-PRO, NECi-NECf) : it better reflects the package deal in decision making and its results are less sensitive to small changes in emission reduction scenarios or estimates of costs for single measures.

23. 2320 juni 2015 Assumptions : other impact categories  Weight factors  Weight factors: perception of policy makers on the importance of a certain effect during the negotiations on PRO and NEC used. impacts of ozone  The WTP is corrected for all of the impacts of ozone (weight factor : 1). benefits for agriculture and building materials  The WTP is corrected for benefits for agriculture and building materials (weight factors ? : between 0 and 1; weight factors chosen : 1). human health  Benefits on human health due to PM precursors (SO 2 and NO X ) and direct effects of SO2 : did not play a decisive role in the decision making process (weight factor? : < 1; weight factor chosen : 0)

24. 2420 juni 2015 Assumptions :selection of scenarios Assumptions : selection of scenarios  The ‘reference’ (REF) scenario has not been used to determine the range of the willingness-to-pay 100EUR/ha  WTP based on the UN-ECE Gothenburg protocol and the EU directive on NEC (NEC f ) : 100EUR/ha a good proxy.  For some countries REF scenario includes some ambitious emission reduction programs in less efforts to reach the targets of the Gothenburg Protocol and the NEC directive 100 EUR/ha underestimation? 350EUR/ha  The initial NEC proposal (NEC i ) : upper margin for the WTP : 350EUR/ha = upper bound WTP range

25. 2520 juni 2015 Other assumptions - remarks  We assume that policy makers of the EU have the same WTP for improving ecosystems health in all Europe, including both EU15 and non-EU Europe.  We only look at the issue from a European perspective, which does not reflect differences in WTP between countries.  The WTP differs highly according to the area taken into consideration and includes a form of ‘free-rider behaviour’.

26. 2620 juni 2015 IMPACTS : IMPACTS : Proxy of change in number of hectares ecosystem protected from acidification + eutrophication [ha/tonne] : Krewitt et al. (2001) Willingness To Pay per hectare ecosystem protected [EUR/ha*y] VALUATION SHADOW PRICE of impact of acidification and eutrophication on ecosystems per ton SO 2, NO X and NH 3 emitted [EUR/tonne*year] STEP 3 : an example of application

27. 2720 juni 2015

28. 2820 juni 2015

29. 2920 juni 2015

30. 3020 juni 2015

31. 3120 juni 2015 Further analysis  Questionnaire  To which extent represent PRO and NEC WTP?  Importance of benefits for health, agriculture, building materials?  Marginal impacts: Ecosense, IIASA, EMEP, Krewitt et al.  Other indicator for marginal impacts : Exceedance critical loads expressed in terms of exceedance threshold of H + in groundwater

32. 3220 juni 2015 It has to be noted that this approach is different from the valuation step used so far in ExternE, as the latter mainly reflects WTP of individuals, measured by a wide number of indicators and methods, but not the WTP of policy makers. Therefore, it cannot be used for cost-benefit analysis or policy advices related to these emission reduction policies, as it is based on these policies. Nevertheless, this second-best method gives useful data for comparison of energy technology and fuels because it gives us ‘shadow prices’ for a non-market scarcity, protected ecosystems from acidification and eutrophication. ¡ REMARK !