Ecological Economics 30 1999 147 – 159
ANALYSIS
Comprehensive cost-effectiveness analysis of measures to reduce nitrogen emissions in Switzerland
Reto Schleiniger
Institute for Empirical Research in Economics, Uni6ersity of Zurich, Blumlisalpstrasse
10
,
8006
Zurich, Switzerland Received 11 May 1998; received in revised form 22 September 1998; accepted 16 October 1998
Abstract
This paper proposes a comprehensive cost-effectiveness analysis to evaluate environmental policies. While effective- ness is measured as the reduction of different pollutants aggregated to a damage index, all the other effects apart from
pollutant reduction are monetarised and expressed as cost. The damage index is based on the ‘Umwelt-Belastungs- Punkte’ UBP-method Environmental Impact Points and is extended to include the different geographical ranges
of various pollutants. The method is then applied to assess the cost-effectiveness of nitrogen reduction measures in Switzerland. The results indicate that a less nitrogen-intensive agricultural production and the use of a new generation
of low nitrogen oxide burners are very cost-effective. © 1999 Elsevier Science B.V. All rights reserved.
Keywords
:
Cost-effectiveness; Nitrogen emissions; Damage index; Effluent charges
1. Introduction
In August 1994, the Swiss government set up a working group with the mandate to develop a
strategy to reduce nitrogen emissions in Switzerland. In particular, the group was assigned to propose
measures to curb nitrogen pollution and to evaluate these measures from both an ecological and an
economic perspective.
1
The commission was accom- plished in September 1996. The present paper is
based on the work of this group. It gives a methodical discussion and analyses additional measures.
There are two basic methods to economically evaluate pollution reduction policies: the cost-
benefit and the cost-effectiveness analysis. Both methods have specific advantages and drawbacks.
The cost-benefit analysis allows one to evaluate measures absolutely, by expressing all the effects
in monetary terms. However, the well-known problem is to reliably monetarise the ecological
consequences of emission reduction policies Bing-
Tel.: + 41-1-6343727; fax: + 41-1-6344907; e-mail ad- dress: iewretoiew.unizh.ch
1
The author himself was assigned to the working group as an expert, dealing mainly with methodical and economic ques-
tions relating to the topic. 0921-800999 - see front matter © 1999 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 1 - 8 0 0 9 9 8 0 0 1 0 4 - 9
ham et al., 1995. The cost-effectiveness analysis evades the problem of monetarising ecological
effects, measuring the emission reduction in one physical unit e.g. tons of nitrogen per year. As a
consequence, the cost-effectiveness analysis allows a relative rating of the measures examined only.
Furthermore, since different pollutants cannot sensibly be aggregated in physical terms the dam-
age of a ton of CO
2
-emission is not equal to the damage resulting from the emission of a ton of
nitrate, the traditional cost-effectiveness analysis is restricted to one — hopefully — major pollutant
and ignores all the other ecological effects. Studies in this field have been carried out for a variety of
pollutants in different regions, for example, Ma¨ler and Olsson 1990 for sulphur in Europe, Krup-
nick and Walls 1992 for ozone in American cities, Johnsen 1993 for phosphorus and Koop-
man 1995 for CO
2
-emissions in Europe. Gren 1993, Zylicz 1995 additionally consider the im-
pact that different locations of emission sources have on environmental quality. This study is fo-
cused on another issue. In trying to overcome the drawbacks of valuing the invaluable, or of being
limited to considering the emissions of one pollu- tant only, a comprehensive cost-effectiveness anal-
ysis is proposed. In this analysis, effectiveness is measured in terms of reduction of different pollu-
tants aggregated to a damage index, while all the other effects apart from pollutant reduction are
monetarised and expressed as cost. Similar ap- proaches are already applied in health economics,
where effectiveness is measured as a health index, for example, as quality-adjusted life-years Tor-
rance, 1986.
2
With this method, it is intended to possibly include all economic and ecological consequences
in order to derive concrete results to evaluate environmental policies. The goal of the analysis is
to provide the government with information on the comprehensive cost-effectiveness of measures
to reduce nitrogen emissions. This allows the deci- sion maker to choose measures such that a given
environmental standard can be reached at mini- mal cost.
The next section discusses methodical questions and explains the aggregation of various pollutants
to an index. In particular, the problems of assess- ing greenhouse gas emissions and weighing pollu-
tants with different geographical ranges are addressed. In Section 3, the cost-effectiveness
analysis is applied to a range of pollution reduc- tion measures which are at present under political
discussion in Switzerland. These measures are de- scribed briefly and the results are presented in two
stages. While the first stage ignores the interde- pendencies of different measures, the second stage
considers the sequence of introducing the mea- sures according to their cost-effectiveness. Section
4 concludes.
2. Methodical considerations
