Post on 08-Feb-2016
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Presention to Session on Social Equity, Environment and Distribution
Prof. Ross McKitrickDept of Economics
University of Guelph
2-sided equity considerations
• Distribution of benefits of environmental quality
• Distribution of costs of environmental policy
• Conjecture: Another Environmental Kuznets Curve
Another EKC
• Early stages: environmental policy benefits all classes, especially lower-income groups– Equity increases
• Later stages: environmental policy primarily benefits well-off; costs disproportionately fall on lower-income groups– Equity decreases
Equity
Stringency of policy
2 Examples
• Ontario air quality and the Green Energy Act• Medupi Power Plant South Africa
• Both illustrate:– Modern environmentalism is increasingly an
indulgence of wealthy communities who are shielded from the costs of the policies
Ontario Air Quality• Illustrated with Toronto data:
– Data from NAPS stations at • Bay & Wellesley (BW)• Queensway & Hurontario (QH)• Lawrence and Kennedy (LK)
– Monthly averages + 12-month MA
– Pre-1974 data from Ontario MOE
– NAAQS Lowest Desirable Standard
Toronto Air Pollution Trends
Toronto (Downtown) TSP levels (Micrograms/m3)
0
50
100
150
200
250
300
350
400
450
1962 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998
TSP
(mic
rogr
ams/
m3)
TSP.BW
TSP.avg
Toronto Air Pollution Trends
Toronto (Downtown) Sulphur Dioxide Levels
0
25
50
75
100
125
150
175
200
1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001
SO2
(ppb
)
SO2.BW
SO2.QH
SO2.avg
Toronto Air Pollution Trends
Toronto (Downtown) Ozone Levels (ppb)
0
25
50
75
100
1973 1976 1979 1982 1985 1988 1991 1994 1997 2000
Ozo
ne (p
pb)
O3.BW
O3.LK
O3.avg
Toronto Air Pollution Trends
Toronto (Downtown) NO2 levels (ppb)
0
25
50
75
100
1974 1977 1980 1983 1986 1989 1992 1995 1998 2001
NO2
(ppb
)
NO2.LK
NOX.avg
Green Energy Act 2009
• Context: 4 decades of improvements in air quality• No general compliance problems• Reasonable balance of benefits and costs
• GEA Effects:– At best only trivial changes to already-low pollution levels– Large regressive increases in energy costs – Urban areas shielded from disamenities of Wind Turbine
installations
Impacts of Lambton & Nanticoke on Ontario Air
Impacts of Lambton & Nanticoke on Ontario Air
Impacts of Lambton & Nanticoke on Ontario Air
• DSS/RWDI Reports (2003, 2005)• Total contributions to O3, PM10:
– < 1% of ozone– < 5% of PM10– Emission controls achieve ~75% of what closure would yield
Comparison of Pollution Contributions by OPG in DSS05 and DSS03 Papers
REGION Ozone PM10 DSS05 DSS03 DSS05 DSS03 DSS05 DSS03 DSS05 DSS03 DSS05 DSS03 DSS05 DSS03Ottawa-Carleton RM 20 30 0.00 0.00 0.56 0.57 0.00 0.00 0.13 0.11 0.00 0.00 0.01 0.01Durham RM 0.04 0.08 1.00 0.99 0.01 0.01 0.26 0.20 0.02 0.01 0.02 0.01York RM 0.01 0.04 1.07 1.08 0.01 0.00 0.27 0.21 0.01 0.00 0.02 0.01Toronto MM 20 40 0.03 0.07 1.12 1.12 0.01 0.01 0.30 0.23 0.02 0.01 0.02 0.01Peel RM 0.01 0.04 1.00 1.08 0.00 0.00 0.28 0.21 0.01 0.00 0.02 0.01Hamilton-Wentworth RM 20 40 0.05 0.12 1.65 1.74 0.02 0.01 0.44 0.35 0.01 0.01 0.02 0.02Haldimand-Norfolk RM 1.97 2.94 3.93 3.14 1.03 0.52 1.24 0.84 0.07 0.31 0.03 0.05Waterloo RM 0.01 0.02 1.17 1.34 0.00 0.00 0.31 0.24 0.00 0.00 0.02 0.02Lambton County 0.43 0.89 1.69 2.54 0.28 0.14 0.70 0.45 0.03 0.06 0.02 0.02
REGION DSS05 DSS03 DSS05 DSS03 DSS05 DSS03 DSS05 DSS03 DSS05 DSS03 DSS05 DSS03Ottawa-Carleton RM 0.0% 0.0% 1.6% 1.6% 0.0% 0.0% 0.4% 0.3% 0.0% 0.0% 0.0% 0.0%Durham RM 0.2% 0.4% 2.9% 2.8% 0.1% 0.1% 0.7% 0.6% 0.1% 0.1% 0.1% 0.0%York RM 0.1% 0.2% 3.1% 3.1% 0.1% 0.0% 0.8% 0.6% 0.1% 0.0% 0.1% 0.0%Toronto MM 0.2% 0.4% 3.2% 3.2% 0.1% 0.1% 0.9% 0.7% 0.1% 0.1% 0.1% 0.0%Peel RM 0.1% 0.2% 2.9% 3.1% 0.0% 0.0% 0.8% 0.6% 0.1% 0.0% 0.1% 0.0%Hamilton-Wentworth RM 0.3% 0.6% 4.7% 5.0% 0.1% 0.1% 1.3% 1.0% 0.1% 0.1% 0.1% 0.1%Haldimand-Norfolk RM 9.9% 14.7% 11.2% 9.0% 5.2% 2.6% 3.5% 2.4% 0.4% 1.6% 0.1% 0.1%Waterloo RM 0.1% 0.1% 3.3% 3.8% 0.0% 0.0% 0.9% 0.7% 0.0% 0.0% 0.1% 0.1%Lambton County 2.2% 4.5% 4.8% 7.3% 1.4% 0.7% 2.0% 1.3% 0.2% 0.3% 0.1% 0.1%
PM10Gas Replacement
Ozone PM10Average ConcentrationsApprox Avg 1998
Ozone PM10Base Case Emission Controls
Ozone
Gas ReplacementOzone PM10 Ozone PM10 Ozone PM10
Approximate %Contributions from OPG
Base Case Emission Controls
Distribution of Costs of Closure
Distribution of Costs of Closure
Urban vs rural impacts
Example 2: South Africa
• Major air quality issue in many 3rd-world communities arises due lack of electricity
• Indoor coal, peat, dung and wood fires
• Lung disease, cancer, COPD, cataracts, low birth weight etc.
• Regional haze and deforestation
• Solution: electrification
Medupi Power Plant• “South Africa desperately needs more
electricity capacity. Its existing system is already under pressure and in 2008 came close to collapsing. Rolling blackouts had to be imposed, causing massive damage to the productive economy. As a major coal producer, it made sense to go for coal and it Eskom, the power utility, is planning a 4,800-megawatt coal-fired plant at Medupi in the northern Limpopo region.
• Without energy, countries face very limited or no economic growth: factories and businesses cannot function efficiently; hospitals and schools cannot operate fully or safely; basic services that people in rich countries take for granted cannot be offered.”
Medupi Power Plant
• South Africa applied to the World Bank for a loan to help complete construction of the Medupi power plant. The loan was narrowly approved on April 9, 2010, but was opposed on environmental grounds by– 125 western environmental and foreign aid groups– The governments of the US, UK, Denmark and the
Netherlands.
Conclusion
• Calls for ever-tighter environmental policy tend to come from wealthy urban westerners who:
– Are personally shielded from many of the costs of implementation– Derive an emotional “warm glow” from the policy – Express the benefits in terms of slogans and generalities but can provide no
quantitative estimates
• As a result we are on the downward-sloping portion of the Policy-Inequality curve