Investment perspectives on costs for air pollution control affect the optimal use of emission control measures

Abstract

Cost-effective air pollution emission control has been in focus for decades in international air pollution regulations. Despite large observed emission reductions for many air pollutants, environmental and human health problems persist and more efforts are needed. However, some stakeholders are concerned that the costs for remaining emission control measures are prohibitively high. There are several reasons for concern, and one can be the difference in investment perspectives-i.e. costs of borrowing and time constraints-held by stakeholders. By using the integrated assessment model GAINS, we study whether differences in investment perspectives of Nordic stakeholders influence measures selected for cost-effective emission control and can motivate concerns for high costs of emission control. We distinguish the control cost calculations between a social planner perspective and a corporate perspective and apply these to the GAINS model database on emission control measures. A cost-minimized selection of measures in 2030 is then calculated for increasing environmental and health ambitions for both perspectives. The results show an irregular pattern, but for a range of ambition levels the corporate perspective affects the selection of measures and implies surplus costs for the Nordic social planner of up to 120 million € per year. This is 36% more expensive than the costs of the social planners' selection. Conversely, from a corporate perspective the social planners' selection can imply cost increases of up to 180 million €. We therefore suggest that control of investment perspective effects should be standard in analysis of cost-effective air pollution measures.

Ensuring environmental inclusion in developing countries: the role of macroeconomic policies

“…On the other hand, monetary policy also affects the level of inclusiveness through its channels and many researchers found a negative link between interest rate and environmental degradation (Alola 2019 ; Isiksal et al 2019 ; Qingquan et al 2020 ). Based on the association among environmental degradation and interest rate; many studies found a positive relationship between interest rate and environmental degradation that suggests lowering the interest rate to control environmental degradation (Muhafidin 2020 ; Åström et al 2019 ; Pradeep 2022 ). The positive association emerges because lower interest rates relieve the private sector’s financial restrictions.…”