Local air pollution and global climate change: a combined cost-benefit analysis

Simultaneously tackling climate change and air pollution better than non-linked strategies

Given the many dimensions that air pollution control and climate change management have in common, it is surprising that, to date, they have been seldom analysed in combination. In the cost-benefit analysis documented in this report an attempt to cover at least part of the existing gap in the literature was made by assessing how costs and benefits of technologies and strategies jointly tackling these two environmental problems can best be balanced. By using specific technological options to cut down local air pollution, such as those related to particulate emissions, one may concurrently reduce CO₂ emissions and contribute to diminishing global climate change. Inversely, some of the long-term climate change strategies simultaneously improve air quality in the short term.

With the use of the well-established MERGE model, extended by including emissions of particulate matter, integrated environmental policies were shown to generate net global welfare benefits. It is demonstrated in this MNP-report that discounted benefits of local air pollution reduction significantly outweigh those of global climate change mitigation, at least by a factor of 2, but in most cases of the conducted sensitivity analysis much more. Still, energy policy-making today should not be restricted to what should be the first priority, local air pollution control, with a plea to wait with the reduction of greenhouse gas emissions. Instead, policies that simultaneously address both these issues should be designed, as the combination provides an additional climate change bonus. As such, climate change mitigation proves to be an ancillary benefit of air pollution reduction, rather than the other way around.