The value of air pollution co-benefits of climate policies: Analysis with a global sector-trade CGE model called WorldScan

This paper uses the computable general equilibrium model WorldScan to analyze the co-benefits of reduced emissions of air pollutants as a by-product of climate policies. WorldScan covers the entire world in five regions (two in the EU) and simulates economic growth in a multi-sector neo-classical recursive dynamic framework. It includes emissions and abatement of greenhouse gases (CO2, N2O, CH4) and air pollutants (SO2, NOx, NH3, PM2.5). Abatement includes end-of-pipe controls removing pollutants without affecting the emission-producing activity itself. This paper shows that climate mitigation will significantly reduce the emissions of air pollutants. It estimates the economic value of the avoided air pollution damages by the costs of the air policy that generates the reductions of air pollutant emissions resulting from climate policies. Although the estimates of the co-benefits are uncertain, trade may have a significant impact on the avoided costs of air policies. This also has consequences on the value of the co-benefits of climate policies. The paper also shows that the regional value of co-benefits can be substantial, and may provide an incentive to reduce GHG emissions.