sectoral economic costs and benefits of ghg mitigation - IPCC

José R Moreira
7 Case E – Health Damage Costs and Energy Use
To illustrate the growing importance of air pollution health costs as income rises, consider the
implications for public health of a WEC projection (WEC, 1995) that the number of cars will
increase 6-fold in developing countries between 1990 and 2020. Suppose, hypothetically, that all
cars in developing countries are gasoline cars equipped with three-way catalytic converters (so
that the emission rates are those presented in Table 4 for gasoline cars) and that average health
impact costs are the simple average of those for urban and rural conditions for France (4.3 c per
km) times (GDP/P/21,000), where GDP/P is the average per capita GDP in developing countries 1
which was $2600 in 1990 and is projected in the IIASA/WEC Reference Scenario (Nakicenovic
et al, 1998) to be about $4000 in 2020. Thus, if the willingness to pay increases linearly with per
capita GDP (e=1.0), the health costs from cars in developing countries would increase from $4.3
billion/yr in 1990 to $42 billion/yr in 2020, whereas if e=0.35, costs would increase from $17
billion/yr in 1990 to $123 billion/yr in 2020. These estimated health costs, though high, might
prove to be underestimates of public health costs associated with air pollution from
transportation.
Table 4
Automotive NO X and PM Emissions and Associated Public Health Costs – A
Case Study for France (a)
Fuel and
driving
environment
Fuel Emission
Health Costs in US Dollars
Economy Rate (g/km) Per gram Per km Per liter of fuel
(km/l) NO X PM NO X PM NO X PM Total NO X PM Total
Gasoline b
Urban 8.7 0.68 0.017 0.022 2.75 0.015 0.047 0.062 0.13 0.41 0.54
Rural 10.3 0.79 0.015 0.027 0.188 0.021 0.003 0.024 0.22 0.03 0.25
Diesel
Urban 10.4 0.75 0.174 0.022 2.75 0.017 0.479 0.496 0.17 4.98 5.15
Rural 12.7 0.62 0.150 0.027 0.188 0.017 0.028 0.045 0.21 0.36 0.57
(a) From Spadaro and Rabl (1998) and Spadaro et al. (1998).
(b) For a gasoline internal combustion engine car equipped with a catalytic converter.
In China, coal is the dominant source of energy, the use of coal is expected to grow rapidly in the
decades immediately ahead, and effective pollution controls are not in wide use. A recent World
Bank study (World Bank, 1997) assessing the costs of local/regional air pollution damages in
China (mainly from coal) estimated total costs to be about $48 billion in 1995(7% of GDP),
including impacts of acid deposition as well as health effects from outdoor and indoor pollution.
The study found that the dominant cost was associated with the health impacts of air pollution on
urban residents, some $32 billion in 1995 (5% of GDP). Moreover, the Bank projected that under
"business-as-usual" conditions (with a 2.7-fold increase in coal consumption, 1995-2020) health
damages to urban residents would increase to $98 billion by 2020, at current income levels, or
$390 billion (13% of GDP) with adjustment for growth in income. (The estimated cost of health
impacts increases with income because the World Bank estimated costs on the basis of the
principle of "willingness to pay" to avoid adverse health impacts). If these costs were assigned to
the fuels that cause the damage, the costs per GJ of fuel would tend to be greater than the market
fuel prices. The health damage cost estimates are so high by 2020 that the value of carbon from
fossil fuel consumption in China in 2020 (when CO 2 emissions from fossil fuel burning are
expected to be 1.9 GtC, compared to 0.7 GtC in 1996) would have to be ~$ 200/tC for climate
1 The estimates in Table 4 are for France, where the per capita GDP (GDP/P) was 21,000 US dollars in
1995 – PPP basis. Thus in applying the results for France presented in Table 4 to developing countries in
1990, when GDP/P averaged about 2,600 US dollars, costs would be 0.12 times those estimated for France
in 1995 if e=1.0 and 0.48 times those estimated for France if e= 0.35, when all other factors are equal.
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