The economic consequences of air pollution policies in Arctic Council countries
Arctic Council countries have a critical role in reducing air pollution as, due to their proximity to the Arctic region, improving air quality serves the double purpose to preserve the Arctic climate and improve health and welfare in the region. To substantially reduce air pollution and its negative health and environmental impacts, emission reductions are necessary for all emitting sectors. However, each sector has its own characteristics so that policy action is not uniformly effective across sectors. This report takes a modelling approach and compares a baseline scenario that reflects current legislation, with sectoral policy scenarios in which the best available techniques (BATs) to reduce emissions, are deployed by sector. In each sectoral scenario, firms and households invest in the BATs to reduce the emissions of air pollutants. The macroeconomic effects of policy action can be considered as GDP neutral (-0.02% with respect to the baseline scenario), with costs (-0.26%) and benefits (+0.24%) roughly offsetting each other. The results suggest that substantial benefits from air quality improvements can be obtained when considering emission reductions throughout the economy, and not just in the sectors that are targeted more often, such as industry and transport. Furthermore, the results highlight the need for a country specific policy package as the current levels of policy stringency, the sectoral contributions, and the needs for sectoral investment in new technologies vary by country.