NCPA - National Center for Policy Analysis

Local Benefits of Reducing Greenhouse Gas Emissions

February 9, 2004

Proponents of policies to reduce emissions of carbon dioxide and other gases that may contribute to global warming say that the benefits of measures to avoid a climatic warming trend outweigh the costs that would be imposed by climate change. However, although the cost of various greenhouse gas reduction measures have been estimated, a working paper from the Fondazione Eni Enrico Mattei say economists have not estimated the benefits of avoiding global warming. One reason is that benefits would come 50 years or more in the future.

Despite this, the authors of this working paper believe that there are secondary, or ancillary, benefits that would begin almost immediately and help offset the cost of reducing emissions.

  • Ancillary benefits are local or regional, rather than global, and include improved air quality, less traffic, lower employment costs as emission taxes replace labor taxes, and a general feeling of good conscience for industrialized countries, which are considered the main polluters.
  • European studies have shown that carbon taxes are associated with ancillary benefits such as improved air quality in Germany and reduced road traffic in the United Kingdom and Norway.
  • According to a recent U.K. study, reducing greenhouse gases by 30 percent would cost approximately 1.1 to 2.9 percent of gross domestic product.
  • Ancillary benefits over the next 50 years would recoup about 4 percent of those costs.

Ancillary benefits may be less important to developing countries than developed countries. Furthermore, the value of ancillary benefits in the United States would likely be far less than in European countries; Germany, for example, would benefit more in improved air quality because of its greater population density.

Source: Anil Markandya and Dirk T.G. Rubbelke, "Ancillary Benefits of Climate Policy," Nota Di Lavoro 105.2003, December 2003, Fondazione Eni Enrico Mattei.


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