[PDF] Guide to Assessing the Costs of Inaction of Tackling Air Pollution-IIASA
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The challenge for developing such assessments can therefore be in the lack of capacity and prior knowledge that local teams may have in these areas. A recent UNEP survey among stakeholders in ASEAN countries has confirmed a lack of awareness, limited capacity, and lack of familiarity with relevant tools. Finally, another key barrier to the implementation of ambitious air quality regulation can be a lack of funding. Air pollution mitigation efforts require sustained investment and commitment. However limited financial resources and budgetary constraints coupled with a lack of political will and suitable financing mechanisms, means that they remain underfunded. A study by the Clean Air Fund (2022) found that just 0.5% of international development funding, or 11 billion USD during the period of 2015 and 2022, went towards improving outdoor air quality (Clean Air Fund, 2022). The same study noted the missed opportunity to finance air pollution mitigation as part of climate action – finding that just 2% of the international development funding allocated to achieving the goals of the Paris Agreement explicitly tackles air pollution. The following section (2.2) details the concept of the cost of inaction and how it can be used to support the prioritization and development of new mitigation measures and help address some of the challenges that hold back further action on air pollution. 2.1.3. Challenges for Action “The “Cost of Inaction” refers to the total negative consequences or losses that result from failing to act or make a decision in a particular situation.” The concept of the cost of inaction defined here is illustrated in more detail in Fig. 2.2, specifically in the context of air pollution. Fig. 2.2 shows how the cost of action is the difference in economic costs associated with implementing additional measures related to reducing emissions in the ‘additional policies’ scenario compared to the ‘current policies’ scenario (difference in the yellow bars), while the ‘cost of inaction’ is the total economic cost associated with the differential impacts (difference between the green bars) from reducing emissions (difference in blue bars) in two alternative scenarios: a ‘Current Policy’ Scenario in which only existing relevant current policies are implemented, and an action or ‘Additional Policy’ Scenario that reflects the implementation of additional measures as a result of a new policy or set of policies. Fig. 2.2 Schematic picture of the proposed approach for quantifying costs of action vs costs of inaction, relying on the comparison of Current Policies and Additional Policies Current Policies Additional Policies Cost of Action Cost of Inaction Pollution Level Emission Control Costs Impact Costs
The challenge for developing such assessments can therefore be in the lack of capacity and prior knowledge that local teams may have in these areas. A recent UNEP survey among stakeholders in ASEAN countries has confirmed a lack of awareness, limited capacity, and lack of familiarity with relevant tools. Finally, another key barrier to the implementation of ambitious air quality regulation can be a lack of funding. Air pollution mitigation efforts require sustained investment and commitment. However limited financial resources and budgetary constraints coupled with a lack of political will and suitable financing mechanisms, means that they remain underfunded. A study by the Clean Air Fund (2022) found that just 0.5% of international development funding, or 11 billion USD during the period of 2015 and 2022, went towards improving outdoor air quality (Clean Air Fund, 2022). The same study noted the missed opportunity to finance air pollution mitigation as part of climate action – finding that just 2% of the international development funding allocated to achieving the goals of the Paris Agreement explicitly tackles air pollution. The following section (2.2) details the concept of the cost of inaction and how it can be used to support the prioritization and development of new mitigation measures and help address some of the challenges that hold back further action on air pollution. 2.1.3. Challenges for Action “It encompasses the expenses, damages, or missed opportunities that might result from not acting, as well as any indirect effects that could result.” The concept of the cost of inaction defined here is illustrated in more detail in Fig. 2.2, specifically in the context of air pollution. Fig. 2.2 shows how the cost of action is the difference in economic costs associated with implementing additional measures related to reducing emissions in the ‘additional policies’ scenario compared to the ‘current policies’ scenario (difference in the yellow bars), while the ‘cost of inaction’ is the total economic cost associated with the differential impacts (difference between the green bars) from reducing emissions (difference in blue bars) in two alternative scenarios: a ‘Current Policy’ Scenario in which only existing relevant current policies are implemented, and an action or ‘Additional Policy’ Scenario that reflects the implementation of additional measures as a result of a new policy or set of policies. Fig. 2.2 Schematic picture of the proposed approach for quantifying costs of action vs costs of inaction, relying on the comparison of Current Policies and Additional Policies Current Policies Additional Policies Cost of Action Cost of Inaction Pollution Level Emission Control Costs Impact Costs
including the costs of medication) to the indirect effects to the public and private sectors and the whole economy. Such indirect effects could include, for example reduced labour or overall productivity. A full macroeconomic analysis would typically require the use of computable general equilibrium (CGE) model or similar framework. The assessment team needs to decide, on the basis of available data and tools, as well as on the basis of the preferred accounting framework, which system boundaries and method of monetization will be used. At this stage you can already classify the impacts to be included as either i) can and will be monetized, and costs are readily included; ii) can be quantified, but not monetized; iii) cannot be quantified, but can become part of a narrative, e.g. impacts on differential or gender equity, etc. Therefore, several impacts that could also be included in a cost of inaction assessment, these include but are not limited to: “The cost of inaction will depend on what exactly the action consists of and to what extent this action is implemented.” fuel substitutions in the energy system), or (iii) changes to the demand system (that will also result in changes to the supply system). In the context of the cost of inaction, the following considerations will need to be addressed by the assessment team: i. Are there measures that are already part of the current national public discourse and that would be useful to include in the assessment, independently of their actual (expected) effectiveness and costs? ii. Are there measures that are part of the international public discourse that would be useful to assess, e.g. in the context of the SDG, the Paris Agreement, or other international processes? iii. Which measures likely lead to a substantial reduction in impacts (and associated societal costs) in our national circumstances? The assessment team may have already identified such measures prior to the cost of inaction assessment. iv. And are there actions that can improve multiple different societal goals – e.g. mobility, health, air pollution, GHG emissions? While it may also be useful for the assessment team to consider whether they are interested in also trying to quantify the costs of action and therefore be able to define the ‘net costs of inaction’. If this is the case, then the assessment team should also consider: v. Can the costs of the relevant alternative actions be quantified? Here the general considerations in Box 9 are relevant, as well as the guidance in Step 5 c) below. 3. Which alternative (policy) actions will be covered? quantification may be difficult. Also, whether such damages can be consistently be estimated will depend on the tools available, as discussed in 2b above. though estimates of the appropriate value vary. There are also studies that attach a social cost to different pollutants (such as CH4) to reflect different potencies over different time scales (Shindell et al., 2017). number of km taken by various vehicle modes in a historic year.