Climate Change 2001: Mitigation

Table 8.6: Modelling choices of studies on valuation of ancillary benefits reviewed²¹

Study	Baseline (as of 2010)	Economic modelling	Air pollution modelling	Valuation	Uncertainty treatment

Dessus and O’Connor, 1999	4.5%/yr economic growth; AEEI: 1% Energy consumption: 3.6% PM: 1% Pb: 4.1% CO: 4.8%	Dynamic CGE	Assumed proportionality between emissions and ambient concentrations	Benefits transfer used: PPP of 80% US VSL: $2.1 mill. VCB: $0.2 mill. IQ loss: $2500/point	Sensitivity tests on WTP and energy substitution elasticities
Cifuentes et al., 2000	For AP control, considers implementation of Santiago Decontamination Plan (1998 to 2011)	No economic modelling Only measures with private, non-positive costs considered	Two models for changes in PM2.5 concentrations: 1) Box model, which relates SO₂ and CO₂ to PM2.5 2) Simple model assumes proportionality between PM2.5 concentrations apportioned to dust, SO₂, NO_x, and primary PM emissions. Models derived with Santiagospecific data and applied to nation	Benefits transfer from US values, using ratio of income/capita Uses original value for mortality decreased by standard deviation VSL = US$407,000 in 2000	Parameter uncertainty through Monte Carlo simulation. Reports centre value and 95% CI
Garbaccio et al., 2000	1995 to 2040 5.9% annual GDP growth rate; carbon doubles in 15 years; PM grows at a bit more than 1%/yr	Dynamic CGE model; 29 sectors; Trend to US energy/ consumption patterns; Labour perfectly mobile; Reduce other taxes; Two-tier economy explicit.	Emissions/concentration coefficients from Lvovsky and Hughs (1998); three stack heights	Valuation coefficients from Lvovsky and Hughs (1998); VSL: US$3.6 million (1995) to RMB 82,700 Yuan (RMB 8.3 yuan = $1) in 2010 (income elasticity = 1). 5%/yr increase in VCB to US$72,000	Sensitivity analysis
Wang and Smith, 1999		No economic modelling	Gaussian plume	Benefit transfer using PPP. VSL = US$123,700, 1/24 of US value
Aunan et al., 2000	Assumes status quo emissions scenario	Two analyses: bottom-up approach and macroeconomic modelling	Assumes proportionality between emissions and concentrations	Benefit transfer of US and European values using “relative income” = wage ratios of 0.16	Explicit consideration through Monte Carlo simulation Reports centre value and low, high
Brendemoen and Vennemo, 1994	2025 rather than 2010 2%/yr economic growth 1% increase in energy prices 1%–1.5% increase in electricity and fuel demand CO₂ grows 1.2% until 2000, and 2% thereafter.	Dynamic CGE		Health costs of studies reviewed based on expert panel recommendations Contingent valuation used for recreational values	Assume independent and uniform distributions
Barker and Rosendahl, 2000	SO₂, NO_x, PM expected to fall by about 71%, 46%, 11% from 1994 to 2010	E3ME Econometric Model for Europe		US$/emissions coefficients by country from EXTERNE: B1,500/t NO_x for ozone (B1= $1); NO_x and SO₂ coefficients are about equivalent, ranging from about B2,000/t to B16,000/t; PM effects are larger (2,000–25,000) Uses VSLY rather than VSL: B100,000 (1990)
Scheraga and Leary, 1993	1990 to 2010 7% growth rate carbon emissions Range for criteria Pollutants 1%–7%/yr	Dynamic CGE
Boyd et al., 1995	Static CGE			US$/emissions coefficients
Abt Associates and Pechan-Avanti Group, 1999	2010 baseline scenarios – 2010 CAA baseline emission database for all sectors, plus at least partial attainment of the new NAAQS assumed. Benefits include coming closer to attainment of these standards for areas that would not reach them otherwise. Includes NO_x SIP call	Static CGE		From Criteria Air Pollutant Modelling System (used in USEPA Regulatory Impact Analysis and elsewhere)	SO₂ sensitivity – SO₂ emissions may not go beyond Title IV requirements – NO_x sensitivity – NO_x SIP call reductions not included in final SIP call rule
Burtraw et al., 1999	Incorporates SO₂trading and NO_x SIP call in baseline	Dynamic regionally specific electricity sector simulation model with transmission constraints. The model calculates market equilibrium by season and time of day for three customer classes at the regional level, with power trading between regions.	NO_x and SO₂. Account for conversion of NO_x to nitrate particulates	Tracking and Analysis Framework: the numbers used to value these effects are similar to those used in recent Regulatory Impact Analysis by the USEPA.	Monte Carlo simulation for CRF and valuation stages.

²¹ AEEI, Autonomous Energy Efficiency Improvement; PM_{10, 2.5}, particulate matter less than 10 or 2.5 microns, respectively; CGE, Computable General Equilibrium Model; PPP, Purchasing Power Parity; W TP, Willingness To Pay; AP: air pollution; CAA: Clean Air Act; NAAQS: National Ambient Air Qaulity Standards; SIP: State Implementation Plan; CRF: concenrtration-response function; CL: confidence level; VSLY and VSL: Value of Statistical Life Year, Value of Statistical Life; RIA: Regulatory Impact Analysis; VCB, value of a case of bronchitis.

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