An Economic Interpretation of the Compensation Mechanism in the RAINS Model.

In 1999 the optimization mode of the Regional Air Pollution Information and Simulation (RAINS) model was used to support international environmental negotiations on the Protocol to Abate Acidification, Eutrophication and Ground-level Ozone of the UN/ECE Convention on Long-range Transboundary Air Pollution and on the Directive for National Emission Ceilings of the Commission of the European Union. The optimization determines the cost-minimal set of emission reductions that bring acid deposition below user-specified constraints. In the original formulation of the optimization problem in the RAINS model, such deposition constraints were specified for each of the 750 grid cells in Europe, for which acid deposition is calculated, and emissions had to be reduced in such a way that all constraints are fully met. During the course of the negotiations it was recognized that, using such a formulation, deposition targets for individual grid cells might impose undue emission control burdens, which might not always be fully supported by verified scientific data. As a consequence, a "compensation" mechanism was developed, which introduces a certain spatial flexibility to the achievement of the deposition targets while maintaining the overall level of environmental achievements. This paper provides an economic interpretation of the compensation mechanism.

An Economic Interpretation of the Compensation Mechanism in the RAINS Model

In 1999 the optimization mode of the Regional Air Pollution Information and Simulation (RAINS) model was used to support international environmental negotiations on the Protocol to Abate Acidification, Eutrophication and Ground-level Ozone of the UN/ECE Convention on Long-range Transboundary Air Pollution and on the Directive for National Emission Ceilings of the Commission of the European Union. The optimization determines the cost-minimal set of emission reductions that bring acid deposition below user-specified constraints. In the original formulation of the optimization problem in the RAINS model, such deposition constraints were specified for each of the 750 grid cells in Europe, for which acid deposition is calculated, and emissions had to be reduced in such a way that all constraints are fully met. During the course of the negotiations it was recognized that, using such a formulation, deposition targets for individual grid cells might impose undue emission control burdens, which might not always be fully supported by verified scientific data. As a consequence, a "compensation" mechanism was developed, which introduces a certain spatial flexibility to the achievement of the deposition targets while maintaining the overall level of environmental achievements. This paper provides an economic interpretation of the compensation mechanism

Economic Instruments for Air Pollution Control

Economic theory and empirical models suggest that economic instruments should help us to meet environmental goals at a lower cost. Practical experience, however, shows that the cost savings of emission trading are smaller than expected and charges usually have had small incentive impacts. This book gives the first comprehensive review of economic theory, simulation models, and practical experience of using economic instruments. It also focuses on air pollution control. Because of its unique blend of theoretical and empirical research, the book provides interesting reading for both economists and those interested in environmental policy. Part I examines theoretical aspects and simulation modeling within a national context. Part II surveys practical experience in a variety of countries. Part III explores international issues, such as joint implementation

The Malmquist Productivity Index.

efficiency ; technology ; investments ; costs

On the origins of data envelopment analysis

data envelopment analysis