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Technical synergies and trade-offs between abatement of global and local air pollution

Journal article
Authors J Bonilla
Jessica Coria
Thomas Sterner
Published in Environmental and Resource Economics
Volume 70
Issue 1
Pages 191–221
ISSN 0924-6460
Publication year 2018
Published at Department of Economics, Environmental Economics Unit
Pages 191–221
Language en
Keywords Environmental policies, Shadow pricing, Directional distance function , Climate change, Local pollution, Policy interactions.
Subject categories Economics


In this paper, we explore the synergies and tradeoffs between abatement of global and local pollution. We build a unique dataset of Swedish combined heat and power plants with detailed boiler-level data 2001–2009 on not only production and inputs but also on emissions of CO2 and NOx. Both pollutants are regulated by strict policies in Sweden. CO2 is subject to theEuropean UnionEmissionTrading Scheme and Swedish carbon taxes;NOx— as a precursor of acid rain and eutrophication—is regulated by a heavy fee. Using a quadratic directional output distance function, we characterize changes in technical efficiency as well as patterns of substitutability in response to the policies mentioned. The fact that generating units face a trade-off between the pollutants indicates the need for policy coordination.

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