Presention to Session on Social
Equity, Environment and Distribution
Prof. Ross McKitrick
Dept 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
Equity
Stringency of policy
• 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
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)
450
TSP.BW
400
TSP.avg
TSP (micrograms/m3)
350
300
250
200
150
100
50
0
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
Toronto Air Pollution Trends
Toronto (Downtown) Sulphur Dioxide Levels
200
SO2.BW
175
SO2.QH
SO2 (ppb)
150
SO2.avg
125
100
75
50
25
0
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
Toronto Air Pollution Trends
Toronto (Downtown) Ozone Levels (ppb)
100
O3.BW
O3.LK
O3.avg
Ozone (ppb)
75
50
25
0
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
Toronto Air Pollution Trends
Toronto (Downtown) NO2 levels (ppb)
100
NO2.LK
NOX.avg
NO2 (ppb)
75
50
25
0
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
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
Comparison of Pollution Contributions by OPG in DSS05 and DSS03 Papers
Approx Avg 1998
Average Concentrations
Ozone
PM10
20
30
Base Case
Ozone
PM10
DSS05
DSS03
DSS05
DSS03
0.00
0.00
0.56
0.57
0.04
0.08
1.00
0.99
0.01
0.04
1.07
1.08
0.03
0.07
1.12
1.12
0.01
0.04
1.00
1.08
0.05
0.12
1.65
1.74
1.97
2.94
3.93
3.14
0.01
0.02
1.17
1.34
0.43
0.89
1.69
2.54
Emission Controls
Ozone
PM10
DSS05
DSS03
DSS05
DSS03
0.00
0.00
0.13
0.11
0.01
0.01
0.26
0.20
0.01
0.00
0.27
0.21
0.01
0.01
0.30
0.23
0.00
0.00
0.28
0.21
0.02
0.01
0.44
0.35
1.03
0.52
1.24
0.84
0.00
0.00
0.31
0.24
0.28
0.14
0.70
0.45
DS
0
0
0
0
0
0
0
0
0
Base Case
Ozone
PM10
DSS05
DSS03
DSS05
DSS03
0.0%
0.0%
1.6%
1.6%
0.2%
0.4%
2.9%
2.8%
0.1%
0.2%
3.1%
3.1%
0.2%
0.4%
3.2%
3.2%
0.1%
0.2%
2.9%
3.1%
0.3%
0.6%
4.7%
5.0%
9.9%
14.7%
11.2%
9.0%
0.1%
0.1%
3.3%
3.8%
2.2%
4.5%
4.8%
7.3%
Emission Controls
Ozone
PM10
DSS05
DSS03
DSS05
DSS03
0.0%
0.0%
0.4%
0.3%
0.1%
0.1%
0.7%
0.6%
0.1%
0.0%
0.8%
0.6%
0.1%
0.1%
0.9%
0.7%
0.0%
0.0%
0.8%
0.6%
0.1%
0.1%
1.3%
1.0%
5.2%
2.6%
3.5%
2.4%
0.0%
0.0%
0.9%
0.7%
1.4%
0.7%
2.0%
1.3%
DS
0.
0.
0.
0.
0.
0.
0.
0.
0.
• DSS/RWDI Reports (2003, 2005)
• Total contributions to O3, PM10:
REGION
Ottawa-Carleton RM
Durham RM
York RM
Toronto MM
Peel RM
Hamilton-Wentworth RM
Haldimand-Norfolk RM
Waterloo RM
Lambton County
40
– <201% of ozone
40
– <205% of PM10
– Emission controls achieve ~75% of what closure would yield
REGION
Ottawa-Carleton RM
Durham RM
York RM
Toronto MM
Peel RM
Hamilton-Wentworth RM
Haldimand-Norfolk RM
Waterloo RM
Lambton County
Approximate %
Contributions from OPG
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