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The Cost of Air Pollution: Health Impacts of Road Transport

Outdoor air pollution kills more than 3.5 million people a year globally, far more than was previously estimated. This book estimates the economic cost of the health impacts of air pollution from road transport – on a global scale, but with special reference to People’s Republic of China, India and the OECD member countries. It establishes this estimate by multiplying the “value of statistical life” (derived by aggregating individuals’ willingness to pay to secure a small reduction in the risk of premature death) by the number of deaths attributable to outdoor air pollution, as released by the World Health Organisation (WHO) in 2010.

The Swedish Tax on Nitrogen Oxide Emissions

Sweden was facing a serious soil acidification and water eutrophication problem caused partly by emissions of nitrogen oxides (NOx) from combustion processes in transport, industry and power. In 1992, Sweden introduced a high tax on NOx emissions from large combustion sources (e.g. power plants, industrial plants, waste incinerators). The tax was accompanied by a refund according to the amount of energy generated. This ensures that facilities with low NOx emission intensitites are net beneficiaries of the scheme. Continuous monitoring of emissions was also made mandatory. The tax was designed to accelerate and stimulate investment in advanced combustion and pollution-abatement technologies and as a supplement to existing regulatory measures.

Effective Carbon Prices

Economic textbooks predict that taxes and emission trading systems are the cheapest way for societies to reduce emissions of CO2. This book shows that this is also the case in the real world. It estimates the costs to society of reducing CO2 emissions in 15 countries using a broad range of policy instruments in 5 of the sectors that generate most emissions: electricity generation, road transport, pulp & paper and cement, as well as households’ domestic energy use. It finds wide variations in the costs of abating each tonne of CO2 within and among countries, as well as in the sectors examined and across different types of policy instruments. Market-based approaches like taxes and trading systems consistently reduced CO2 at a lower cost than other instruments. Capital subsidies and feed-in tariffs were among the most expensive ways of reducing emissions