unep collaborating centre on energy and environment sustainable development and climate change...

UNEP Collaborating Centre on Energy and Environment

Sustainable Development and Climate Sustainable Development and Climate Change Policies in Developing Countries Change Policies in Developing Countries

Kirsten Halsnæs


The growth of CO2 emissions from developing countries


IPCC Conclusions

• CC is part of a larger challenge of SD.

• CC policies are more effective when embedded in broader development strategies.

• SD policies affect the potential and costs of CC policies

• SD can be used as a framework for understanding society’s ability to respond to CC impacts (adaptation and mitigation), but more work is needed to understand and assess the capacity for policy implementation.


Conceptual Basis of SD and CC Studies

The capacity for policy implementation depends on:

• Manmade capital: Production technologies in manufacture, energy systems, land use sectors, transport.

• Natural capital: Energy sources, forestry, soil quality, ecological systems.

• Human capital: Educational level and professional skills.

• Social capital: Institutions, information sharing systems, government regulation, property rights, trust and enforcement.

Most adaptation and mitigation studies have only addressed

manmade and natural capitals


Difficulties in Assessing the “Capitals”

• Capitals are stocks of resources that constitute the basis for development and human response.

• Complexities when substitution between the capitals are constrained (strong sustainability)

• Intergenerational equity: Uncertainty, preferences of future generations.

• Social capital and institutional aspects embody intangible attributes, which only show up in relation to policy implementation. Unpredictable?

• Human and social capital have a public ”good character”.

• Investements in these capitals can go beyond the scope of climate change policies.


Study Area and sectors

Scenarios, US$ 1996

Average ancillary benefit

$ per t C

Key pollutants Major endpoints

Dessus and O’Connor, 1999

Santiago Chile Tax of $67

Tax of $157

Tax of $284

251

254

267

Seven air pollutants

Health – morbidity and mortality, IQ

Cifuentes et al., 2000

Santiago Chile Energy efficiency

62 SO2, NOx, CO, NMHC, PM10, dust.

Health

Gabaccio et al., 2000

China – 29 sectors

Tax of $1

Tax of $2

52

52

PM10, SO2 Health

Wang and Smith, 1999

China – power and households

Energi efficiency, fuel substitution

PM, SO2 Health

Barker and Rosendahl, 2000

Western Europe, 19 regions

Tax of $161 153 SO2, NOx, PM10

Human and animal health and welfare, materials, buildings and other physical capital, vegetation

Burtraw et. al.,,1999

USA Tax of $10

Tax of $25

Tax of $50

3

2

2

SO2, NOx Health


Sustainable Development Addressed as a Public Planning Problem

•Various SD definitions in the literature. Commonality is that they try to integrate development, environment and social dimensions in a short- and long time frame.

•Approach:

•Use experiences from literature on public planning and decision making.

•Define indicators that reflect major policy priorities.

•Use analytical approaches that can facilitate an evaluation of multiple objectives.


Potential Sustainable Development Indicators

Economic

•GDP growth

•Sectoral development

•Employment

•Foreign exchange

•Investments

•Regional structure

Human:

• Education

• Health

• Capabilities: Freedom, well

being, living standards

Environment

•Air pollution

•Water pollution

•Waste discharge

•Exhaustible resources

•Biodiversity

Social

•Local participation and

sharing of benefits

•Income distribution

•Information sharing systems

•Institutional capacity building

UNEP Collaborating Centre on Energy and EnvironmentExamples of linkages between general policy priorities and indicators that can be integrated in technical assessments

Policy priorities in general development

programme

Examples of arguments included in the technical assessment

Economic development Macro indicators e.g. GDP growth.

Social cost of the project.

Employment Impacts on employment for different

labour market segments.

Rural development programmes

Economic activity generated in rural area.

Energy supply to rural area.

Local air pollution improvement

SO2 , NO x and particulate emissions.

Acid depositions.

Health impacts.

Increasing activity in the manufacturing

sector

Investments in manufacture.

Energy supply to manufacture.

Poverty alleviation

Change in numbers under various poverty lines.


W(x)

x10

x20

x30

x40

X1

X2

X3

X4

X0 Xi

Indicators in the baseline case

Indicators in the policy case

Preference function for the indicators

UNEP Collaborating Centre on Energy and EnvironmentOverview of main structural elements in CBA, CEA, and MCA

Cost Benefit

Analysis Cost Effectiveness Analysis .

Multi-criteria Analysis

Selection of state variables x

Based on welfare concepts – e.g. defined to reflect policy priorities.

Partly based on welfare concepts – e.g. defined to reflect policy priorities.

Indicators representing policy priorities.

Standard for measurement of x

Welfare, eventually in monetary units.

Welfare, eventually in monetary units. GHG emissions in physical units or other policy goals.

Quantitative and/or qualitative units.

Weighting rules

Individual preferences as stated on markets.

Individual preferences as stated on markets.

Alternatives: no weighting. preferences of

policy makers. broader policy

process.

Preference function

Maximise welfare. Minimise welfare loss of achieving a target reduction of GHG.

Total score on indicators if weighting rules are applied. Individual indicators. Sensitivity analysis. Tradeoff analysis.


Objective/Welfare Functions


Matrix for Evaluating Biogas and Windturbine Case Examples

Non-policy state

State with biogas project

State with windturbine project

Impact biogas project

Impact windturbine project

Cost

x10 BX1 TX1 (BX1 –x10) (TX1 -x10)

Energy Consumption

x20 BX2 TX2 (BX2- x20) (TX2-x20)

Local environment

x30 BX3 TX3 (BX3- x30) (TX3- x30)

Employment

x40 BX4 TX4 (BX4– x40) (TX4 – x40)

GHG emissions

x50 BX5 TX5 (BX5-x50) (TX5-x50)


Case Studies


Impacts Included in the Social Cost Assessment

• Employment:– Net income gain adjusted for unemployment benefits,

informal employment, work related expenses.

– Value of lost leisure time.

– Value of health impacts of being unemployed.

• Health impacts:– Mortality: Value of statistical life, ppp adjusted.

– Major injuries.

• Air pollution impacts:– Benefit transfer approach based on ExterneE data.


Cost Concepts


Botswana

Cases

Project Baseline Social cost

adjustment

Road pavement Pavements of sandy roads

Sandy roads, 50% higher fuel consumption

Reduced SO2,Nox and particulates

Employment

Efficient lighting Introduction of compact fluorescent lamps, 11 watt.

Incandescent lamps 60 watt.

Coal fired power


Central PV 2 MW capacity of PV additional to baseline capacity

Coal fired power Reduced SO2,Nox and particulates

Coal mining health impacts

Industrial Boilers Improved coal fired boiler with 85% efficiency

Existing coal boiler with 79 % efficiency


Power factor correction

Installation of power factor correction.

Coal fired power without p.f.c.



Financial and social costs of GHG emission reduction projects in Botswana, all costs are in $ per t. CO2 reduction, 10 % discount rate

Gross

Financial costs

Net Financial costs

Local air pollution Impacts

Employment impacts

Social costs alt. 1

Coal mining health impacts

Social costs alt. 2

Vehicle inspection

1.7

1.6

-0.3

-

1.2

0

1.2

Efficient industrial boilers

5.0 -5.9 -51.7 - -57.6 -180.6 -221.8

Paved roads

13.0 -101.2 -28.3 -0.6 -140.3 0 -140.3


14.3 -7.9 -70.2 - -78.1 -184.0 -262.2

Efficient lighting households

67.5 -113.7 -19.65 - -133.3 -51.4 -184.7

Central PV

86.6 67.1 -60.2 - 5.8 -184.2 -161.7

Petroleum pipeline

181.1 125.6 -47.0 - 79.6 0 79.6


Botswana Conclusions

• Large national ancillary benefits of GHG emission reduction case projects.

• Fuel saving benefits are significant due to energy efficiency improvements.

• Local air pollution reduction benefits – low estimate compared with urban air pollution damages.

• Health benefits are in conflict with employment issues for the coal mining sector.

• Project ranking differ for the financial- and social cost perspective.

• Botswana can maximise local benefits of CC policies if project supply is based on development priorities.


Alternative Approaches and Objectives

• CBA: Decision criteria to maximise the total net economic impact of implementing the individual projects.

• CBA: Decision criteria to maximise the economic benefits relative to the gross financial project costs.

• CEA: Decision criteria to minimise financial project costs per unit of GHG emission reduction.

• CEA: Decision criteria to minimise social costs per unit of GHG emission reduction.

• MCA: Decision criteria to maximise the project score on indicators with equal weights to all impacts.

• MCA: Decision criteria to maximise the project score on indicators. Particular high weights to reduced SO2 and NOx emissions.


Ranking order of Botswana case projects

CBA

Net Benefits

CBA Benefit/cost ratio

CEA Net financial costs

CEA Social costs

MCA Equal weights

MCA High weights to SO 2 and NO x emissions

Road pavement

1

5

2

1

1

3

Efficient lighting

4 1 1 2 4 5

Industrial boilers

5 3 4 4 2 1

Central PV

2 4 5 5 5 4


3 2 3 3 3 2


Conclusions

• Normative element in the selection of policy objectives.

• Project ranking change with different analytical approach and different policy objective weights.

• Major differences in approaches relate to the establishment of weights.

• In particular MCA are very sensitive to assumptions about weights – no rule exist.

• Policy evaluation depends on:

– Chosen SD indicators

– Measurement and valuation approach

– Overall policy objectives.


Sustainable Development GHG Emission Reduction

Projects

Development, Local Environment, Social Impacts, GHG Emissions

Joint International Policies

Developing Countries Industrialised Countries

unep collaborating centre on energy and environment sustainable development and climate change...

Documents

environment slide

energy systems

social capital

human capital

noxhealth slide

capitals capitals

sectors tax

energy sources