Measuring Welfare Loss Caused by Air Pollution in Europe: A CGE Analysis

Abstract and PDF report are also available on the MIT Joint Program on the Science and Policy of Global Change website (http://globalchange.mit.edu/).To evaluate the socio-economic impacts of air pollution, we develop an integrated approach based on computable general equilibrium (CGE). Applying our approach to Europe shows that even there, where air quality is relatively high compared with other parts of the world, health-related damages caused by air pollution are substantial. We estimate that in 2005, air pollution in Europe caused a consumption loss of around 220 billion Euro (year 2000 prices, around 3 percent of consumption level) and a social welfare loss of around 370 billion Euro, measured as the sum of lost consumption and leisure (around 2 percent of welfare level). In addition, we estimated that a set of 2020-targeting air quality improvement policy scenarios, which are proposed in the 2005 CAFE program, would bring 18 European countries as a whole a welfare gain of 37 to 49 billion Euro (year 2000 prices) in year 2020 alone.This study received support from the MIT Joint Program on the Science and Policy of Global Change, which is funded by a consortium of government, industry and foundation sponsors

Alleviating Adverse Implications of EU Climate Policy on Competitiveness: The Case for Border Tax Adjustments or the Clean Development Mechanism?

Ambitious unilateral EU environmental policy has raised concerns about adverse competitiveness implications for European energy-intensive and export-oriented sectors. We analyze the economic and environmental implications of two different measures to address these concerns in the EU Emission Trading Scheme (EU ETS): border tax adjustments (BTA) and the Clean Development Mechanism (CDM). Numerical simulations with a computable general equilibrium model of the global economy demonstrate that alternative BTA regimes are suitable to alleviate adverse competiveness implications of unilateral European climate policy on energy-intensive and export-oriented industries. The regulatory protection of these industries via subsidies for EU exporters and tariffs for non-EU importers goes, however, at the expense of sectors which are excluded from the EU ETS. We show that the choice of alternative benchmarks (i.e. carbon intensities) for the level of BTA substantially affects these competitiveness implications. The simulations further indicate that limited access to low-cost emission abatement via the CDM in the EU ETS alleviates adverse competitiveness impacts to a comparable extent as the most ambitious BTA scheme. Increasing where-flexibility of emission abatement thus represents an attractive market-based alternative to the application of border tax adjustments in unilateral climate policy. --Emissions Trading,EU ETS,Competitiveness,Border tax adjustments,Clean Development Mechanism,CGE model

Economy-wide Impacts of Climate on Agriculture in Sub-Saharan Africa

Two possible adaptation options to climate change for Sub-Saharan Africa are analyzed under the SRES B2 scenario. The first scenario doubles irrigated areas in Sub-Saharan Africa by 2050, compared to the baseline, but keeps total crop area constant. The second scenario increases both rainfed and irrigated crop yields by 25 percent for all Sub-Saharan African countries. The two adaptation scenarios are analyzed with IMPACT, a partial equilibrium agricultural sector model combined with a water simulation model, and with GTAP-W, a general equilibrium model including water resources. The methodology combines advantages of a partial equilibrium approach, considering detailed wateragriculture linkages with a general equilibrium approach, which takes into account linkages between agriculture and non-agricultural sectors and includes a full treatment of factor markets. The efficacy of the two scenarios as adaptation measures to cope with climate change is discussed. Due to the low initial irrigated areas inthe region, an increase in agricultural productivity achieves better outcomes than an expansion of irrigated areas. Even though Sub-Saharan Africa is not a key contributor to global food production or irrigated food production, both scenarios help lower world food prices, stimulating national and international food markets.Computable General Equilibrium, Climate Change, Agriculture, Sub-Saharan Africa, Integrated Assessment Model

Global Health and Economic Impacts of Future Ozone Pollution

Abstract and PDF report are also available on the MIT Joint Program on the Science and Policy of Global Change website (http://globalchange.mit.edu/).We assess the human health and economic impacts of projected 2000-2050 changes in ozone pollution using the MIT Emissions Prediction and Policy Analysis-Health Effects (EPPA-HE) model, in combination with results from the GEOS-Chem global tropospheric chemistry model that simulated climate and chemistry effects of IPCC SRES emissions. We use EPPA to assess the human health damages (including acute mortality and morbidity outcomes) caused by ozone pollution and quantify their economic impacts in sixteen world regions. We compare the costs of ozone pollution under scenarios with 2000 and 2050 ozone precursor and greenhouse gas emissions (SRES A1B scenario). We estimate that health costs due to global ozone pollution above pre-industrial levels by 2050 will be $580 billion (year 2000$) and that acute mortalities will exceed 2 million. We find that previous methodologies underestimate costs of air pollution by more than a third because they do not take into account the long-term, compounding effects of health costs. The economic effects of emissions changes far exceed the influence of climate alone.United States Department of Energy, Office of Science (BER) grants DE-FG02-94ER61937 and DE-FG02-93ER61677, the United States Environmental Protection Agency grant EPA-XA-83344601-0, and the industrial and foundation sponsors of the MIT Joint Program on the Science and Policy of Global Change

KLUM@GTAP: Introducing biophysical aspects of land-use decisions into a general equilibrium model: A coupling experiment

In this paper the global agricultural land use model KLUM is coupled to an extended version of the computable general equilibrium model (CGE) GTAP in order to consistently assess the integrated impacts of climate change on global cropland allocation and its implication for economic development. The methodology is innovative as it introduces dynamic economic land-use decisions based also on the biophysical aspects of land into a state-ofthe- art CGE; it further allows the projection of resulting changes in cropland patterns on a spatially more explicit level. A convergence test and illustrative future simulations underpin the robustness and potentials of the coupled system. Reference simulations with the uncoupled models emphasize the impact and relevance of the coupling; the results of coupled and uncoupled simulations can differ by several hundred percent.Land-use change, computable general equilibrium modeling, integrated assessment, climate change

A systematic review of empirical methods for modelling sectoral carbon emissions in China

© 2019 Elsevier Ltd A number of empirical methods have been developed to study China's sectoral carbon emissions (CSCE). Measuring these emissions is important for climate change mitigation. While several articles have reviewed specific methods, few attempts conduct a systematic analysis of all the major research methods. In total 807 papers were published on CSCE research between 1997 and 2017. The primary source of literature for this analysis was taken from the Web of Science database. Based on a bibliometric analysis using knowledge mapping with the software CiteSpace, the review identified five common families of methods: 1) environmentally-extended input-output analysis (EE-IOA), 2) index decomposition analysis (IDA), 3) econometrics, 4) carbon emission control efficiency evaluation and 5) simulation. The research revealed the main trends in each family of methods and has visualized this research into ten research clusters. In addition, the paper provides a direct comparison of all methods. The research results can help scholars quickly identify and compare different methods for addressing specific research questions

THE ECONOMIC IMPACT OF THE SOUTH-NORTH WATER TRANSFER PROJECT IN CHINA: A COMPUTABLE GENERAL EQUILIBRIUM ANALYSIS

Water resources are unevenly spread in China. Especially the basins of the Yellow, Hui and Hai rivers in the North are rather dry. To increase the supply of water in these basins, the South-to-North Water Transfer project (SNWT) was launched. Using a computable general equilibrium model this study estimates the impact of the project on the economy of China and the rest of the world. We contrast three alternative groups of scenarios. All are directly concerned with the South-to-North water transfer project to increase water supply. In the first group of scenarios additional supply implies productivity gains. We call it the “non-market” solution. The second group of scenarios is called “market solution”. The market price for water adjusts such that supply and demand are equated again. In the third group of simulations the economic implications of China’s capital investment in infrastructure for the water South-North water transfer project is analyzed. Finally, the investment is combined with the increased capacity of water. If an increase in water supply in China leads to an increase in productivity of their water-intensive goods and services (non-market solution) this would result in a huge positive welfare effect from increased production and export. The effect on China’s welfare would still be positive, if a market for water would exist (market solution), but the world as a whole would lose. The negative effect for the rest of the world is largely explained by a deterioration of its terms-of-trade. Well functioning water markets in China are unlikely to exist.Computable General Equilibrium, South-North Water Transfer Project, Water Policy, Water Scarcity

Integrating biofuels into the DART model: Analysing the effects of the EU 10% biofuel target

Biofuels and other forms of bioenergy have received increased attention in recent times: They have partly been acclaimed as an instrument to contribute to rural development, energy security and to fight global warming but have been increasingly come under attack for their potential to contribute to rising food prices. It has thus become clear that bioenergy cannot be evaluated independently of the rest of the economy and that national and international feedback effects are important. In this paper we describe how the CGE model DART is extended to include first-generation biofuel production technologies. DART can now be used to assess the efficiency of combined climate and bioenergy policies. As a first example the effects of a 10% biofuel target in the EU are analyzed.biofuels, CGE model, EU climate policy, Environmental Economics and Policy, Resource /Energy Economics and Policy,

Effects of the CDM on Poverty Eradication and Global Climate Protection

In an impure public good model we analyze the effects of CDM transfers on poverty as well as on the global climate protection level. We construct an analytical model of a developing and an industrialized region, both of which independently seek to maximize their utility – a function of private consumption, domestic air quality, and global climate protection. They do so by distributing their finite expenditures across (1) the aggregate consumption good, (2) end-of-pipe pollution control technologies, and (3) greenhouse gas abatement. Based on our analytical findings, we develop two sets of simulations for China in which we vary the rate of the CDM transfer. The simulations differ by the assumption of China’s domestic air quality policy – the first assumes a technology-standards policy which fixes a level of end-of-pipe SO2 control, whereas the second assumes a technology-neutral policy which simply fixes the level of total SO2 emissions.Ancillary Benefits, CDM, Climate Policy, Impure Public Goods, Transfers, Abatement Technology

Integrating biofuels into the DART model: analysing the effects of the EU 10% biofuel target.

Bioenergie; Allgemeines Gleichgewicht; CGE-Modelling; Klimaschutz; Förderung regenerativer Energien; Wirkungsanalyse; EU-Staaten;