1. Climate and local pollution: ancillary benefits of climate mitigation A.Golub, E. Strukova Environmental Defense

2. Emission cone

3. Why ancillary benefits are important? Prevention of climate change (i.e. reduction of the greenhouse gases emission) generates immediate costs; Avoided damage is in the distant future and if discounted to calculate PV, then they often appear not significant enough to justify the costs mentioned above; Ancillary benefits may offset some costs and narrows the gap between costs of GHG reduction and discounted benefits.

4. Wide range of literature exists on ancillary benefits Methodology: –Baseline; –Scenarios; –Valuation. Coverage: –Global- regional-countrywide – pectoral – city –individual enterprise or project; –All around the world; Scope: –Human health risk; –Ecosystems; –Biodiversity etc.

5. Ancillary benefits in the selected countrywide studies StudyCountryLives saved per MtC reduction VOSL$ per tC reduced O’Connor 2003China210$43,2759 Garbaccio 2000China255$72,00052 (mortality and morbidity) Bussolo, O’Connor 2001 India334$273,000 in 1995 58 Dessus, O’Connor, 2003 Chile100$2.1 million in 2010 200 Goulder, 1993USAn/a 34 Boyd, 1995USAn/a 41 RIVM, 2000EUn/a 53-79 Dudek, 2003Russia 171$300,00051

6. Results of ancillary benefits studies at the local level in Russia Avoided Mortality Risk (cases per year) Avoided carbon emission (in thousand Mt) Avoided damage per ton of carbon, $/t Moscow (health risk from SO 2 ) 830982253 Voronezh (health risk from PM 10 ) 832466535 Nizhnii Novgorod (health risk from SO 2 ) 7924595 Velikii Novgorod (health risk from PM 10 ) 3230033 Novodvinsk (health risk from PM 2.5 ) 5127355 Source: Authors estimation based on (Danilov-Danilian, 2003).

7. Links between carbon reduction and ancillary benefits Despite obvious influence of GHG reduction policy on conventional pollution there is no “function” to link AB and carbon emission; The literature demonstrates significant deviation of AB per ton of carbon across the studies; Therefore, there is no simple way to incorporate AB into the models that are applied to estimate the cost of environmental policy.

8. How ancillary benefits emerge Partial internalization of externalities by existing regulation of conventional pollutants; GHG regulation creates incentives to reduce conventional pollution beyond the required level; Massive technological innovation; Non-equilibrium and transition processes; Premature market institutions; Step-wise character of regulation Even with perfect internalization, AB could emerge, since regulation may shift the optimal solution

9. The measurement of ancillary benefits Baseline; Mitigation scenarios; Human health risk assessment; Determination of environmental effects; Impact on economy; Regional specifics; Population profile; Environmental valuation; WTP dynamics and discount rate.

10. Health benefits are the major fraction of AB How to translate differences in conventional pollutants into human risk reduction: –Air dispersion modeling – concentration – concentration/response – health risk. Economic valuation of human health risk: –Usually economic valuation is done outside the economic model; –Just a few studies include feedback.

11. Valuation of human health risk OECD countries: –Statistical live; –Cost of morbidity; –YOLL; –DALY. Developing and transition countries: –Mainly benefit transfer then PPP or MER? AB are sizable in all countries: –Number of cases in developing countries are significantly higher but unit mortality and morbidity costs are lower.

12. Conclusions Ancillary benefits exist for many reasons –Difference between optimal and actual path of climate regulation –Time lag between identification of problem and implementation of solution

13. Conclusions Ancillary benefits cannot be ignored when framing climate policy –Ancillary benefits help offset costs in the near-term, bridging the gap until climate mitigation benefits are realized in the longer-term Ancillary benefits can exist anywhere –Developed, developing, and transition economies all exhibit ancillary benefits –Ancillary benefits are found in regional, countrywide, sectoral, and local studies

14. Conclusions Environmental regulation is a discrete, and not linear, process, which is one of the reasons for the emergence of ancillary benefits Due to continually expanding knowledge about health impacts and their causes, there will always be room to further modernize environmental legislation

15. Conclusions With the use of a more sophisticated analytical framework (i.e. an improved GE model), AB may appear to be smaller than in less advanced models. However, this would also entail that the costs of the policy will be lower as well. Less sophisticated models will predict higher benefits and higher costs.