Atmospheric Pollution and Economic Development

Transcription

1 Atmospheric Pollution and Economic Development Program Leader: Dr. Markus Amann Research Plan Abstract Recent scientific work indicates potentially important economic and environmental synergies between air pollution control and the mitigation of greenhouse gases at different temporal and spatial scales. A systematic assessment of such synergies and their interactions with economic development could thus point the way towards effective and viable approaches for protecting the local and global atmosphere. The Atmospheric Pollution and Economic Development program aims to employ IIASA s expertise in applied interdisciplinary research to develop innovative modelling tools to identify strategies to protect the local, regional and global atmosphere while imposing least burden on the economic development. IIASA s work will bring together geo-physical and economic aspects of pollution control into one assessment framework and implement it together with a network of collaborators - for practical policy analyses in different regions of the world. Projects will explore geo-physical linkages between air pollution and greenhouse gases connected to tropospheric ozone and aerosols, it will implement approaches for health impact assessment of air pollution in developing countries and estimate emission control costs for air pollutants and greenhouse gases for Asia. Methodologies will be developed to capture policyrelevant interactions between pollution control and economic development and to identify cost-effective pollution control strategies that put least burden on the economic development. 1 Introduction The economic burden associated with the control of pollution is often considered to be an impediment to economic development. This is a critical issue for development policy, and concerns about inequitable distributions of such burdens across economic sectors and countries turn out as serious obstacles for reaching environmental agreements at the national and international levels. Recent scientific work indicates potentially important economic and environmental synergies between air pollution control and the mitigation of greenhouse gases at different temporal and spatial scales. A systematic assessment of such synergies and their interactions with economic development could thus point the way towards effective and viable approaches for protecting the local and global atmosphere. Through a systems perspective, IIASA s research will highlight potential synergies and tradeoffs emerging from the interactions between different types of pollution, emission control measures and economic mechanisms, which have received only little attention in conventional disciplinary approaches. In particular, the program will focus on the recently identified 1

2 linkages between air pollution control and greenhouse gas mitigation and their relation to economic development. As a distinctive feature, IIASA s work will bring together geophysical and economic aspects of pollution control into one open analysis framework and implement it for practical policy analyses in different regions of the world. The program s work will build on IIASA s successful record of applied interdisciplinary research on innovative modelling tools for an integrated assessment of pollution control strategies. Its scientific reputation and the international basis of the Institute will help to provide impartial advice for the local, regional and global policy processes in the coming decade that will address the protection of the atmosphere. 2 Background Fears about potentially detrimental impacts of pollution control costs on the economic development are often used as an argument to abstain from effective measures. However, worldwide air quality data show that, once nations reach a certain level of economic development, they manage to control their emissions and, thus, effectively improve local and regional pollution. While such a trend reversal is evident for air pollution, there is still little indication of a similar tendency for greenhouse gases that have impacts on global climate. Among the reasons that might contribute to the hesitation to embark on greenhouse gas mitigation, two appear as most relevant: (i) Mitigation costs are often believed to seriously compromise economic development, and (ii) concrete environmental benefits from such measures are less obvious, because they do not occur at the spatial and temporal scales people are most concerned about. In contrast, air pollution control has now become widely accepted, inter alia because carefully chosen control measures are seen to be compatible with economic development and because it is understood that such measures can effectively safeguard acceptable living conditions for the immediate environment. Scientific analysis including earlier work at IIASA was instrumental in creating these insights. There are a number of important interactions between the control of air pollutants and greenhouse gases. Emissions originate from the same sources, many control measures directed towards air pollution have effects on the emissions of greenhouse gases and vice versa, emissions interact with each other in the atmosphere, and separately or jointly they cause a variety of environmental and health impacts at the local, regional and global scales. There is growing recognition that a comprehensive and combined analysis of air pollution and climate change could reveal important synergies of emission control measures (Swart et al., 2004). Insight into the multiple benefits of control measures across scales, especially the understanding of the near- to medium-term and local benefits of strategies aimed at long-term and global environmental problems could make emission controls more acceptable to today s societies, both in industrialized and developing countries. Multi-pollutant emission control strategies that simultaneously address local, regional and global environmental targets offer flexibility to increase their economic efficiency. Carefully designed pollution control measures and instruments could minimize the burden on the economic development. Framed in an appropriate way, these linkages could point out decisive near- to medium-term cobenefits of measures directed at long-term targets. Vice versa, understanding of these linkages 2

3 could help design strategies for local and medium-term targets that simultaneously contribute to the achievement of global and long-term environmental needs. However, while scientific understanding on many individual aspects of air pollution and climate change has considerably increased in the last years, little attention has been paid to a holistic analysis of the interactions between these aspects. A number of scientific challenges need to be mastered for a combined assessment. 3 Strategic goals and objectives The Atmospheric Pollution and Economic Development program aims to employ IIASA s expertise in applied interdisciplinary research to develop innovative modelling tools to identify strategies to protect the local, regional and global atmosphere while imposing least burden on the economic development. IIASA s work strives to identify synergistic pollution control strategies that maximize benefits at all scales, both for industrialized and developing countries. With these new tools IIASA s program also seeks to establish a network of collaborators conducting distributed analyses of policy-relevant aspects of pollution control strategies for different regions in the world. Thereby the program will provide relevant insights for the local, regional and global policy processes in the coming decade that will address the protection of the atmosphere. To achieve this strategic goal, the research objectives of the Atmospheric Pollution and Economic Development program are as follows: Quantify the multiple physical and economic benefits of atmospheric pollution control occurring at different temporal and spatial scales in terms that are tangible for today s societies. Particular emphasis will be attributed to the interactions between air pollution control and greenhouse gas mitigation. Identify medium-term economic and technical strategies and policy instruments that contribute to the protection of the atmosphere in efficient ways so that the economic burden is minimized. Study the interactions of such effective emission control approaches with the overall economic and technological development, both for developing and industrialized countries. Integrate these aspects into a practical assessment framework that allows collaborators in different regions of the world conducting distributed policy analyses on national and international pollution control strategies. These activities of the Atmospheric Pollution and Economic Development program will make an important contribution to IIASA s Greenhouse Gas Initiative, providing a linkage between the global and long-term perspective of scenario development with policy-relevant mediumterm and local aspects of greenhouse gas mitigation. 3

4 4 Implementation plan 4.1 Research framework IIASA s Atmospheric Pollution and Economic Development program will focus on aspects of pollution control that could provide relevant assistance to decision makers who have to balance economic resources for the protection of the atmosphere against other pressing needs of development. Through a systems perspective, IIASA s research will highlight potential synergies and tradeoffs emerging from the interactions between different types of pollution, emission control measures and economic mechanisms, which have received only little attention in conventional disciplinary approaches. In particular, the program will focus on the recently identified linkages between air pollution and greenhouse gas mitigation and their relation to economic development. As a distinctive feature, IIASA s work will bring together geo-physical and economic aspects of pollution control into one open analysis framework and implement it for practical policy analyses in different regions of the world. With this focus, the Atmospheric Pollution and Economic Development program will first screen recent scientific insights on geo-physical and economic interactions of different types of pollution. This review will identify aspects that could potentially offer strategic synergies, which could make pollution control strategies economically more viable. Concepts will be developed to interface these aspects with each other, so that their strategic importance can be judged in an overall context. Based on disciplinary state-of-the-art models, quantitative reduced-form representations of the critical relationships will be derived, which will then be introduced into a stylized core integrated assessment tool. In a further step, this core assessment tool will be implemented for specific regions. This will respect the spatial and temporal scales decision makers are most concerned with, i.e., addressing the development of individual countries over the next few decades. Implementations will begin with the countries in Europe and South-East Asia. Initially, the rest of the world will be represented in more aggregated form, while implementations for individual countries will be gradually extended, e.g., for the remaining Annex 1 countries of the UN Framework Convention on Climate Change. Important aspects related to other scales, such as the relation to global long-term strategies for stabilizing greenhouse gas concentrations in the atmosphere, will be incorporated through interfaces to other ongoing research activities at IIASA that address these issues in more detail, i.e., with IIASA s programs on Energy, Forestry and the Greenhouse Gas Initiative. Based on this quantitative representation of the geo-physical and economic aspects of pollution control strategies, the program will develop formal methods (e.g., optimization and simulation approaches) to explore efficient strategies that maximize benefits while not impeding economic development. This will be done in collaboration with IIASA s project on Integrated Modelling Environment (IME). Once this tool is ready and implemented, methods will be developed that assess the implications of the various uncertainties in policy-relevant terms and explore the scope for robust strategies. To establish scientific credibility before the tools will be made available for practical policy analysis, the new methodologies and model 4

5 implementations will be exposed to scientific peer review. Thereby, a validated and documented tool will be available towards the end of the program s activities that allows a comprehensive assessment of strategies for the mitigation of greenhouse gases together with the control of air pollution. This tool will be available in time for the analysis and negotiations of post-2012 climate policies and could offer valuable insights for these deliberations. Research of the Atmospheric Pollution and Economic Development program will be conducted in seven of individual projects along two lines: Development of methodologies to address individual geo-physical and economic linkages and to combine them in a core integrated assessment model and database system. This will produce a common framework to interface quantitative information on the various aspects with each other in a consistent way. Individual projects will focus on three themes: (i) physical linkages of atmospheric pollution across scales, (ii) economic aspects of pollution control strategies, and (iii) distributed global analyses of regional and local pollution control strategies. Policy applications. As soon as tools have been completed, the program will seek to apply them in actual policy contexts. Seven projects will address specific problem areas in these fields. Since it is foreseeable that all these issues will remain of scientific interest over the coming years, these projects will extend of the full lifetime of the Atmospheric Pollution and Economic Development program. 4.2 Physical linkages of atmospheric pollution across scales To assist societies in balancing economic resources to protect the atmosphere at all scales against other pressing needs of development, benefits of such atmospheric protection measures must be tangible for those who take action. This is usually the case for air pollution control, where health and environmental benefits are clearly connected to the places where action is taken, and occur in the near- to medium term. For measures directed at the protection of the global common, such as long-term stabilization of greenhouse gas concentrations in the atmosphere, immediate benefits are however less obvious to the actors. New scientific insight points out a number of cases, where emissions influence different environmental impacts at different spatial and temporal scales. Accordingly, control of these emissions will have multiple benefits for all impacts. This is the case for instance for tropospheric ozone, which causes acute damage to human health and vegetation, while at the same time it acts as a greenhouse gas with a strong positive radiative forcing. For aerosols (small particulates), important associations have been found between the exposure of people and acute and chronic health impacts. Aerosols also play an important role in the climate system, with positive (warming) or negative (cooling) radiative forcing from different aerosol species at the regional scale. In other cases, different pollutants interact with each other in the atmosphere, and enhance or reduce the impacts of other pollutants. The Atmospheric Pollution and Economic Development program will review the scientific understanding of these mechanisms. It will quantify the policy-relevant aspects as reduced- 5

6 from relationships derived from disciplinary state-of-the-art models, and incorporate them into the core integrated assessment tool. It will be a scientific challenge to properly address the different spatial and temporal scales at which the different processes and benefits occur. At the same time, these geo-physical connections of scales offer the strategic potential to design policies for local and near-term benefits that also have positive impacts on global and long-term objectives Project 1: Tropospheric ozone The complex atmospheric chemistry of tropospheric ozone opens one possibly important potential for developing synergistic emission control strategies. The Third Assessment Report of IPCC identified tropospheric ozone as the third largest contributor to radiative forcing (IPCC, 2001), however with large regional differences. At the same time there is serious concern in all industrialized countries about health and vegetation damage from ground-level ozone. With increasing emissions from the rapidly growing car fleets, ozone is now becoming a major concern for health and vegetation in the developing world too. There are important linkages between the local, regional and global effects of ozone resulting from the complex chemistry connected to hydroxyl (OH) radicals. Via this chemistry, emissions and atmospheric concentrations of the greenhouse gases methane (CH 4 ) and ozone are directly linked with the ozone precursor emissions nitrogen oxides (NO x ) and carbon monoxide (CO). Reductions, e.g., of NO x emissions might reduce ozone concentrations (and thus health impacts and regional radiative forcing), but enhance via the OH chemistry the atmospheric lifetime of methane, which leads to increased radiative forcing (Dentener et al., 2004). At the same time, the greenhouse gas methane and carbon monoxide contribute to the formation of hemispheric background ozone, which has already reached in many parts of the world levels that cause health and vegetation damage. Traditionally, efforts to control local ozone peaks have been targeted at the short-lived precursor emissions NO x and VOC. Its longer-lived precursor emissions methane (CH 4 ) and carbon monoxide (CO) that have more impact on hemispheric background concentrations of ozone have received less attention, although they might offer cost-effective means for reducing the ozone burden in the atmosphere. Given the limited remaining scope for further control of the local ozone precursor emissions NO x and VOC, methane controls (at the hemispheric scale) could turn out as a cost-effective approach for reducing ozone damage. Within the Atmospheric Pollution and Economic Development program, a separate project will analyze the impacts of the short-lived (NO x and VOC) and long-lived (CH 4 and CO) precursor emissions on hemispheric background levels of tropospheric ozone and their implications on health-relevant ozone exposure at the global scale. It will assess the impacts of changes and ozone on regional radiative forcing and compare them with the effects from the associated changes in atmospheric methane burdens. This assessment will be based on a variety of atmospheric chemistry models, such as TM5 developed by JRC-Ispra (Krol et al., 2004) and MOZART operated by Princeton University (Horowitz et al., 2003). It will contrast relationships identified with these models with results from ongoing model intercomparison exercises (the 2030 Photcomp IPCC-AR4 Experiment II, and with MICS-Asia Phase 3 of the EANET East Asian Monitoring Network). With this 6

7 quantitative information, IIASA s work will aim at identifying cost-effective emission control strategies that alleviate near-term ozone damage to human health and vegetation while reducing radiative forcing that contributes to global long-term climate change. This project will start in It will establish interfaces between IIASA s emission scenario databases and the input formats of the various models listed above, involving routines to derive gridded emission fields based on work at the JRC-Ispra with the most recent version of the global EDGAR-III emission inventory. A set of emission control scenarios will be designed that allows a systematic assessment of the responses of these models in terms of indicators for health-relevant ozone concentrations and regional radiative forcing towards changes in the various precursor emissions. In the coming years, these model responses will be analyzed and reduced-form representations will be developed that could readily implemented in the overall assessment framework. It is expected that first cost-effectiveness analyses balancing local emission controls of NO x and VOC emissions against hemispheric strategies to control CH 4 and CO should be ready in Uncertainty assessments and documentation are planned for 2009 and Project 2: Aerosols Aerosols are part of the climate system because they interact with both incoming solar and outgoing terrestrial radiation. Their role in radiative forcing has received increasing attention over the last years. While understanding on some of the important mechanisms has considerably improved, there remain many scientific uncertainties which do not yet allow drawing conclusive quantitative lessons about the impacts of the different types of aerosols on the radiative budget. At the same time scientific knowledge on the impacts of aerosols (i.e., of fine particulate matter) on human health has substantially increased (e.g., WHO, 2003), so that the reduction of ambient levels of particulate matter (e.g., PM2.5) tops now the agenda of virtually all air quality managers around the world. Given these twofold impacts of aerosols on radiative forcing and human health, emission control strategies aimed at the protection of human health, as they are considered at the moment in many countries, will have (negative or positive) impacts on radiative forcing at the regional scale. Earlier work at IIASA has highlighted reductions of emissions of particulate matter and of the associated health impacts as an important immediate and local co-benefit of global long-term decarbonisation strategies (Klaassen et al., 2004). Properly designed measures aimed at the reduction of the emissions of primary particles and the precursor emissions of secondary aerosols including decarbonisation strategies could yield important and tangible benefits, in the near-term on human health and in the long run on climate change. Another environmental effect of aerosols that has not yet been fully explored is their impact on the hydrological cycle and resulting meteorological patterns related to their regional radiative forcing (e.g., Ramanathan et al., 2002). This aspect could be of high relevance for decision making, since it affects important endpoints (floods, droughts, storms) close to the 7

8 sources where measures are taken and, due to the short lifetime of aerosols, responds quickly to changes in emissions. Within the Atmospheric Pollution and Economic Development program, a second project will be established to address these impacts of aerosols. Based on a number of disciplinary atmospheric models, the aerosol project will develop quantifications of the physical relationships between the aerosol precursor emissions and health-relevant exposure metrics and radiative forcing at the regional scale. In 2006, the project will explore model responses in terms of health-relevant exposure metrics to changed precursor emissions. This analysis will be conducted in collaboration with JRC- Ispra using its TM5 model (Krol et al., 2004), and include the models participating in the forthcoming aerosol model intercomparison organized under the ACCENT Network of Excellence of the EU-FP6. In the following years, reduced-form representations of the responses of this model ensemble will be developed that could then be incorporated into the integrated assessment framework. Implementation for different world regions is foreseen for 2008 and thereafter. Where scientific information will remain inconclusive, estimates of uncertainties will be incorporated in the analysis. A second activity of this project will explore regional impacts of aerosol emissions on the hydrological cycle and weather patterns. It is planned to conduct this work in collaboration with the Max Planck Institute for Meteorology (Hamburg) using the ECHAM model (Stier et al., 2005) and with the Max Planck Institute for Chemistry (Mainz) with its MATCH-MPIC model (Lawrence et al., 1999) Project 3: Urban pollution, indoor pollution and personal exposure One of the main scientific challenges of the Atmospheric Pollution and Economic Development project is the linkage of pollution sources and their impacts across spatial and temporal scales. Global and long-term perspectives of pollution control strategies will be addressed in cooperation with IIASA s Greenhouse Gas Initiative. For quantifying health impacts, however, it will be crucial to connect regional-scale air quality with urban pollution. Earlier work at IIASA has developed a methodology to derive from coarse resolved atmospheric dispersion models health-relevant PM exposure indicators that are representative for population exposure in urban areas. This approach requires only a limited amount of local (meteorological, topographic and socio-economic) information that is usually readily available. In 2006, a specific project will extend this City-Delta methodology that has been developed for European metropolitan areas to Asian cities. In the coming years, the project will implement the methodology for quantifying health impacts attributable to the outdoor exposure of fine particulate matter and ozone for Asian cities, addressing inter alia the transferability of epidemiological studies conducted for North American and European populations to Asia. 8

9 Standard approaches for health impact assessment of outdoor air pollution employ relationships between observed health effects and pollutant concentrations measured at fixed monitoring sites at urban background stations. While these measured concentrations are not representative for the exposure of individual persons, they quantify the impacts for entire populations if no additional pollution sources are present whose signals are not captured by urban background monitors (Rotko et al., 2000). This assumption holds for typical lifestyles in industrialized countries. It has been shown for developing countries, however, that personal exposure is often dominated by indoor pollution sources, especially from cook stoves fired with coal or biomass (Zhang et al., 2003). The project will develop a methodology to quantify health impacts from indoor pollution sources within the overall assessment framework. This component might reveal important negative health impacts of decarbonisation strategies that enhance the use of bio-fuels, and is of critical importance for the analysis of greenhouse gas mitigation strategies in developing countries. In the longer run this project will allow the Atmospheric Pollution and Economic Development program to designing cost-effective emission control strategies for individual mega-cities in developing countries that lead to effective reductions in health impacts from air pollution while making positive contributions to greenhouse gas targets. 4.3 Exploring economic aspects of pollution control strategies As a distinguishing feature, the Atmospheric Pollution and Economic Development program will combine economic aspects of pollution control with the critical geo-physical characteristics in such a way that policy-relevant conclusions can be derived. Thus, the program will focus on those economic aspects that seem most important for drawing policyrelevant lessons. In principle, research will address three fields: (i) the quantification of costs of pollution control measures, (ii) the interactions with overall economic development and (iii) the design of cost-effective emission control strategies and appropriate policy instruments Project 4: Quantification of pollution control costs The Atmospheric Pollution and Economic Development program will build on the estimates of emission control cost for air pollutants (SO 2, NO x, VOC, NH 3, PM, CO) and greenhouse gases (CO 2, CH 4, N 2 O, F-gases) developed for the RAINS (Regional Air Pollution Information and Simulation) and GAINS (Greenhouse gas Air pollution Interactions and Synergies) models before (Klaassen et al., 2004). These estimates are derived from a bottomup engineering approach distinguishing several hundreds specific measures that lead to lower emissions of pollutants to the atmosphere. In 2006 and 2007, with funding from the European Commission FP6, a project will implement these cost estimates for India and China (GAINS-Asia). This will provide the basis for comparisons of emission control potentials and costs between developing and industrialized countries in a fully consistent way, and thus allow quantitative assessments of 9

10 the scope of international economic instruments. Furthermore, these estimates open the possibility for analyzing the distributions of economic burdens across countries and sectors, so that equity and burden sharing issues could be explored on an internationally consistent basis. This activity will be carried out in cooperation with the Chinese Energy Research Institute (ERI), Beijing, and The Energy and Resources Institute (TERI) in New Delhi, India. While the present approach of a bottom-up estimate allows a detailed assessment of costs at the technology level. The original cost curve approach for end-of-pipe measures has been recently extended to capture the potentials from structural changes, e.g., in the energy system, which is of particular relevance for estimating costs of CO 2 measures (Klaassen et al., 2004). This extended approach distils relevant information from sectoral partial equilibrium models (e.g., for the energy sector) and introduces it into the integrated assessment framework. It is planned that during the course of the project an activity will apply this methodology for the agricultural and possibly the transport sectors to obtain a more comprehensive assessment of the emission control costs. For the agricultural sector (relevant for emissions of non-co 2 greenhouse gases) cooperation is sought with IIASA s Land Use program Project 5: Interactions between pollution control and economic development To allow a more comprehensive assessment of the economic burden to societies imposed by pollution control, a second line of analysis is needed. This takes as the starting point the bottom-up estimates of investment and recurrent costs of emission control and analyses them in a context of overall economic development. The economics literature contains numerous estimates of such interactions, especially for slowing, mitigating or adapting to a change in the global climate (e.g., Energy Journal, 1999). Modelling approaches have been developed to address the feedback links between the economy and the environment, e.g., the environmental impacts of pollution control in economic terms, or the side-effects of pollution control within the economy (e.g., OECD, 2000; Mayeres and Van Regemorter, 2004; Yang et al., 2005). However, the variety of analytical approaches used makes it difficult to interpret the differences among results from different studies. While their findings are relevant for decisions to allocate resources for pollution control, these approaches have usually not found application in a practical policy context. An exception to this is the impact assessment carried out for the Thematic Strategy on Air Pollution (European Commission (forthcoming)), which analyzes the overall economic and employment effects of air pollution costs using an applied general equilibrium model. IIASA has been instrumental in developing this ground-breaking modelling approach, which carries out a systematic economic analysis of all air pollution expenditure in the EU up to For details see, the methodology development of the Clean Air for Europe Programme Cost- Benefit Analysis (including general equilibrium modelling) available at The modelling results are not yet published at the time of writing this proposal. 10

11 Using these methodological advancements, the proposed project will focus on interactions that are most relevant in a decision-making context, i.e., aspects that could potentially alter decisions on the allocation of resources for pollution control. In particular, the project will address the following aspects: The welfare effects of emission abatement, e.g., for producing pollution control equipment or for energy conservation investments. Implementing a technical abatement measure is in itself an economic activity that is linked to the rest of the economy. Thus, it affects economic activity in other sectors and has both positive and negative implications on income levels and employment. The structural changes induced by pollution control measures. Price changes caused by technical pollution control measures or by emission taxes might modify production and consumption levels. Behavioural responses, especially in terms of consumption levels, are likely to depend on the overall level of economic development, and might be different in developed and developing countries. This effect can be different for (closed) sectors servicing domestic economy and (open) sectors competing on the world market. Distributional aspects of pollution control strategies. Physical and economic impacts of pollution control are unlikely to be evenly distributed, either between regions, economic sectors or income groups. Employment effects can also be included in such analysis. Spending effects and structural changes are typically addressed with various types of computable general equilibrium (CGE), macroeconomic and hybrid models (e.g., AIM, GTEM, GTAP-E, E3ME, EPPA, GREEN, MERGE, OXFORD, RICE, G-CUBED, MS- MRT, SGM, WorldScan, WIAGEM). These models account for the inter-sectoral reallocation of resources that could occur as a consequence of pollution control measures. They also capture the changes in the structure of the economy, when impacts affect simultaneously many sectors, markets, prices and incomes as well as the changes in aggregate welfare arising, e.g., from an external 'shock'. Some of these models have examined the impacts of a change in commodity prices due to impacts of pollution control by tracing this change through the rest of the economy (e.g., Babiker et al., 2001). Others model directly through hard-linking (e.g., Böhringer, 1998) or soft-linking (e.g., Jacobsen, 1998) - the general equilibrium impacts of pollution control on a market or sector by drawing on the results of 'bottom-up' studies. With demand and supply responses of relevant industries derived from 'bottom-up' studies built into the model, these costs are then traced through the rest of the economy. Distributional aspects of pollution control measures ( who is paying ) for abatement of air pollution or greenhouse gases have been mostly studied along their regional and intergenerational dimensions. Few studies have addressed the inter-sectoral distributions of economic burdens (e.g., Barker et al., 2001; Capros et al., 2002), mostly for developed countries, showing large differences between sectors. However, such sectoral differences as well as equity between income groups are of high relevance for national decision makers. Unfortunately most economic models are not well equipped to deal with equity issues between income groups. Still multi-sectoral general equilibrium models can provide 11

12 important insights also into the distribution if the impacts can be analysed through changes in technology and price of household use of energy for heat, lighting and power. In some cases the indirect macro-economic effects, particularly on the income of households and the employment of their members can be helpful, too. Depending on the level of income, implications are different for different income groups within countries and for societies at different levels of economic development. While a wide body of economic research has addressed these socio-economic issues, only little work has been done to date to integrate them with decision-relevant geophysical and bottom-up economic aspects of pollution control, especially for a combined perspective on air pollution control and greenhouse gas mitigation (Capros et al., 2001; Yang et al., 2005; European Commission, (forthcoming)). The available economic tools are complex and should thus not be directly incorporated into the envisaged integrated assessment framework. It is not clear from the outset how such interactions could be best incorporated into the integrated analysis while maintaining IIASA s assessment tool at a manageable complexity. In 2006, a feasibility study will be conducted to review existing model analyses and their findings. The review will cover spending effects, structural changes and distributional aspects and pay special attention to differences resulting from different levels of economic development. A second focus will draw lessons from practical examples where an economic impact assessment of pollution control measures has been integrated with geo-physical aspects of pollution control. This will include the macro-economic impact assessment of air pollution control expenditures conducted for the Clean Air For Europe programme of the European Commission, where the RAINS estimates of costs and environmental impacts served as input to the GEM-E3 model. Earlier work, involving the RAINS model, conducted an integrated economic and environmental assessment to derive European environmental priorities ( The Emissions Prediction and Policy Analysis (EPPA) model developed by MIT has integrated the macro-economic assessment of greenhouse gas mitigation with an assessment of climate impacts ( In a second step (in 2007), the project will develop an approach to practically incorporate decision-relevant features of such complex economic assessment tools into the integrated assessment framework. Conceptually this will follow the approach applied by earlier work at IIASA, e.g., for representing the responses of complex geophysical models (e.g., on atmospheric dispersion) through reduced-form representations. Thereby, the integrated assessment tool will be able to conduct the assessment of the environment-economic interactions on a routine basis for a large number of emission control scenarios. In 2008 and the following years, these reduced-form representations will be implemented for the individual countries included in the overall assessment framework Project 6: Tools for identifying cost-effective pollution control strategies A third line of work will create formal tools for identifying cost-effective pollution control strategies. This activity will build upon the recently developed estimates of national emission control costs for air pollutants and greenhouse gases of the RAINS and GAINS models and 12

13 the outcomes of the two projects describe above. Optimization approaches will be developed that search for sets of measures that simultaneously meet environmental targets on air quality and greenhouse gas reductions at least costs. The analysis will take full account of the interactions between different control measures and pollutants, and thus allow highlighting synergies and trade-offs of particular strategies. In 2006, such approaches will be implemented for the European GAINS and RAINS models, followed by the implementation for Asian countries in In a second stage, these formal optimization approaches will be extended to simulate the role of economic instruments, such as emission trading schemes, joint implementation and the clean development mechanism, i.e., of instruments which aim at equalizing marginal costs of pollution control across countries. With its bottom-up analysis of emission control costs and potentials, the proposed approach will allow quantifying the cost saving potentials from such economic instruments at a country level both for industrialized and developing countries. It further enables identifying constraints on trading potentials imposed by site-specific environmental concerns (e.g., about local air quality). Up to now such constraints have been ignored in most of the analyses of flexible mechanisms, although in practice they could substantially limit the potential for cost-effective transactions. This work will be conducted in collaboration with IIASA s Integrated Modelling Environment (IME) project. 4.4 Distributed global analyses of regional and local pollution control strategies (project 7) While preserving the level of spatial detail that is required to meaningfully address air pollution problems, it seems beyond IIASA s resources to implement and maintain such tools for the entire globe. Instead, it is planned to develop the methodological approach outlined above in such a way that it can be implemented in a distributed form over the Internet by a number of collaborators, while safeguarding global consistency to facilitate global analyses. Thus, the Atmospheric Pollution and Economic Development program at IIASA will form the core of a network of collaborators who analyze the same problem for different regions in the world using the same approach. To facilitate such distributed analysis, work in 2006 will develop Internet software for the methodologies and databases of the core assessment framework, so that subsequently partners outside IIASA can start implementations for different world regions. Collaboration has been established with the Energy Research Institute (ERI), Beijing, and The Energy and Resources Institute (TERI), Delhi, on the implementation of the necessary databases for China and India, respectively. In addition, the network will build on institutions that have earlier collaborated with IIASA s Transboundary Air Pollution project on the European and Asian implementations of the RAINS model. In the longer run it is planned to extend collaboration to institutions in other world regions. In such a way, IIASA s work would catalyze a unique bottom-up source of detailed country-specific information on medium-term emission control options, which will be valuable input to a wide range of global studies. 13

14 4.5 Policy applications While the research plan of the Atmospheric Pollution and Economic Development program foresees the practical availability of the new assessment tool only for the second half of the program period, individual new elements together with the already existing RAINS and GAINS models will be used before on a project basis for several real-world policy analyses. In 2006, these tools will support the development of the revision of the Directive on National Emission Ceilings of the European Union, for which a contract has been received by IIASA, (Project 8) assist the analysis on possible greenhouse gas mitigation strategies within the European Climate Change Program (ECCP) of the European Commission (under contract with the European Commission) (Project 9), and underpin the revision of the multi-pollutant/multi-effect Gothenburg protocol of the UNECE Convention on Long-range Transboundary Air Pollution, which will start immediately after the entry into force of the protocol in June This analysis is based on IIASA s assignment as the Centre for Integrated Assessment Modelling of the European Monitoring and Evaluation Programme (EMEP) of the Convention (Project 10). With the practical involvement in these policy processes already in 2006, there is an excellent window of opportunity for familiarizing decision makers with the extended features of the new model elements and for introducing the tools produced by the Atmospheric Pollution and Economic Development program into practical policy applications in the coming years. 5 Networking and collaboration The ambitious plan for work of IIASA s Atmospheric Pollution and Economic Development program can only be achieved through intensive cooperation with a large number of external and internal collaborators. Collaboration on specific aspects is mentioned within the descriptions of the individual tasks. As an important element, the Atmospheric Pollution and Economic Development program seeks to promote in-house collaboration with other IIASA programs. This includes cooperation with IIASA s Energy and Forestry programs to imbed the near- to medium-term country-specific analyses into global and long-term perspectives, collaboration with the Land Use program to estimate implications of structural changes in the agricultural sector on emission control potentials and costs, and joint work with the Integrated Modelling Environment project to develop formal tools for the cost-effectiveness analysis. Furthermore, the program contributes to the objectives of IIASA s Greenhouse Gas Initiative by providing country-specific and medium-term information to the global long-term assessment. In addition to the external collaborators listed for the individual projects, the program will play an active role in a number of formal scientific networks: 14

15 The program is a contracting partner of the ACCENT FP6 Network of Excellence on Atmospheric Composition Change, responsible for the coordination of the ACCENT sub-project on Atmospheric Sustainability. Since 1999, IIASA s air pollution program is officially assigned as the Centre for Integrated Assessment Modelling (CIAM) of the European Monitoring and Evaluation (EMEP) programme under the Convention on Long-range Transboundary Air Pollution. It receives limited funding from the EMEP protocol under the Convention to coordinate integrated assessment activities across all Parties and to conduct scenario calculations for the negotiations under the Convention. The associated network of national experts reviews IIASA s work at the annual meetings of the Task Force on Integrated Assessment Modelling, and IIASA is organizing annual workshops to address specific aspects of integrated assessment modelling. The program is taking active roles in the European Concerted Research Actions Properties Related to Health Effects (COST action 633) devoted to the need for better understanding of the health consequences of PM-exposure, and in COST action 729 "Assessing and managing nitrogen fluxes in the atmosphere-biosphere system in Europe". 6 Selected publications Bond, Tami C., Streets, D., Yarber, Kristen F., Nelson, Sibyl M., Wo, Jung-Hun, Klimont, Z., 2004, A technology-based global inventory of black and organic carbon emissions from combustion, Journal of Geophysical Research, Vol. 109, D14203, doi: /2003jd003697, July Cofala, J., Amann, M., Gyarfas, F., Schöpp, W., Boudri, J. C., Hordijk, L., Kroeze, C., Li Junfeng, Dai Lin, Panwar, T. S. and Gupta, S. (2004) Cost-effective Control of SO 2 Emissions in Asia. Journal of Environmental Management 72: Dentener, F., Stevenson, D., Cofala, J., Amann, M., Bergamaschi, P., Raes, F., Derwent, D., 2004, The impact of air pollutant and methane emission controls on Tropospheric Ozone and radiative forcing: CTM calculations for the period Atmos. Chem. Phys. Discuss., 4, Swart, R., Amann, M., Raes, F. and Tuinstra, W., 2004, A Good Climate for Clean Air: Linkages between Climate Change and Air Pollution. An Editorial Essay. Climatic Change 66(3): van Vuuren, D.P., Cofala, J., Eerens, H.E., Oostenrijk, R., Heyes, C., Klimont, Z., den Elzen, M.G.J., Amann, M., 2004, Exploring the ancillary benefits of the Kyoto Protocol for air pollution in Europe. Energy Policy, Elsevier Ltd., in press; available online 17 November

16 7 References Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press, Cambridge. Babiker et al. (2001). The MIT Emissions Prediction and Policy Analysis (EPPA) Model: Revisions, Sensitivities, and Comparisons of Results. MIT JOINT PROGRAM REPORT 71 Barker T and K. E. Rosendahl (2000). Ancillary benefits of GHG mitigation in Europe: SO2 NO x and PM10 reductions from policies to meet Kyoto targets using the E3ME model and Externe valuations. In Ancillary Benefits and Costs of Greenhouse Gas Mitigation. OECD Publishing Böhringer C. (1998). The synthesis of bottom-up and top-down in energy policy modelling. Energy Economics 20, pp Capros P., C. Sedee and J. Jantzen (2001) Socio-Economic Trends, Macro-Economic Impacts and Cost Interface RIVM report In European Environmental Priorities: An Integrated Economic and Environmental Assessment, available at Capros P., L. Mantzos M. Vainio and P. Zapfel (2002) Economic efficiency of cross sectoral emission trading in CO2 in the European Union. In J. Albrecht (Ed) Instruments for Climate Policy: Limited versus Unlimited Flexibility?. New Horizons in Environmental Economics. Dentener, F., Stevenson, D., Cofala, J., Amann, M., Bergamaschi, P., Raes, F., Derwent, D. ( 2004) The impact of air pollutant and methane emission controls on Tropospheric Ozone and radiative forcing: CTM calculations for the period Atmos. Chem. Phys. Discuss., 4, Energy Journal (1999). The costs of the Kyoto Protocol: A Multi-Model Evaluation. Special Issue. European Commission (forthcoming) Impact Assessment of Thematic Strategy on Air Pollution. Staff working paper. Horowitz, L., et al., A global simulation of tropospheric ozone and related tracers: Description and evaluation of MOZART, version 2, J. Geophys. Res., 108(D24), 4784, doi: /2002jd002853, 24 December 2003 IPCC (2001). Climate Change 2001: The Scientific Basis. Contribution of Working Group I to the Third Assessment Report of the Intergovernmental Panel on Climate Change. Cambridge University Press. Jacobsen H.K. (1998) Integrating the bottom-up and top-down approach to energy-economy modelling: the case of Denmark. Energy Economics 20, pp Klaassen, G., Amann, M., Berglund, C., Cofala, J., Höglund-Isaksson, L., Heyes, C., Mechler, R., Tohka, A., Schöpp, W. and Winiwarter, W. (2004) The Extension of the RAINS Model to Greenhouse Gases. IR , International Institute for Applied Systems Analysis (IIASA), Laxenburg, Austria. Krol, M.C., S. Houweling, B. Bregman, M. van den Broek, A. Segers, P. van Velthoven, W. Peters, F. Dentener, and P. Bergamaschi (2004) The two-way nested global chemistry- 16