Activities that lead to emissions of pollutants can cause damage to people, goods, and/or nature. The burdens are imposed on society and often not fully born by the polluter. Thus, from the polluter‘s viewpoint, the damages are „external“. Generally speaking, an effect on a group of persons or on the environment, which is caused by another group but which is not fully accounted for by the causing group, is called an externality. Negative externalities are called external costs; positive externalities are called external benefits.

The Impact Pathway Approach

Figure 1 shows the principle of the impact pathway approach. Essentially, there are four steps:

	1.Calculation of emissions.
	2.Calculation of changes of pollutant concentrations.
	3.Calculation of impacts on receptors like humans, animals, plants etc.
	4.Valuation. The external cost method uses money in order to valuate the impacts.

Figure 1: The impact pathway approach.

Emission modeling

Usually it is not enough to know just the emissions from a specific source (like a single power plant) which is investigated. Because of interactions with other emissions, the full emission background in the modeling area is needed.

Dispersion modeling

Dispersion modeling is used in order to assess the path of the emitted substances until they meet damageable receptors. In principle, all types of pollutants and all possible pathways through air, water or soil must be modeled. In practice, prioritization, i.e. focusing on the most relevant pollutants and pathways, is necessary.

Atmospheric modeling is particularly important. Airborne emissions are transported by the wind through the atmosphere and mix with emissions from other sources. Some of the pollutants take part in chemical reactions with other components in the atmosphere. The pollutants can be transported by the wind over hundreds of kilometers. To simulate these atmospheric transport and chemical conversion processes, complex software models are needed. The main atmospheric model used in our group is the Windrose Trajectory Model (WTM) implemented in the EcoSense software package. WTM is a receptor-orientated Lagrangian plume model employing an air parcel with a constant mixing height (population weighted average e.g. 800m for Europe, 620 m for China/Asia) moving with a representative wind speed. The results are obtained at each receptor point by considering the arrival of 24 trajectories weighted by the frequency of the wind in each of the 24 directions. The trajectory paths are assumed to be along straight lines and are started at 96 hours from the receptor point.

The atmospheric model requires a variety of meteorological data. Wind speed, frequencies of wind directions and precipitation data have been implemented for each grid cell of the atmospheric modeling grid.

Modeled annual average concentrations of pollutants in China are shown in Figure 2. Click on the maps to enlarge the view.

	SO2:		Sulfates:
	NOx:		Nitrates:
	NH3:		Primary Particulates:

Figure 2: Modeled annual average concentrations of pollutants in China.

Impact assessment

Emissions increase the concentration of pollutants in the air. The wind transports them to humans or to other receptors. Inhalation of pollutants can damage health.

The impact assessment model combines receptor data with the output of the atmospheric model, i.e. the change of pollutant concentrations due to the emission scenario considered, using exposure-response functions.

An important human health indicator and a major contributor to external costs is mortality. The measure used to quantify mortality effects is the reduction of life expectancy expressed as “Years of Life Lost” (YOLL). “Acute mortality” effects are associated with the correlations between short-term (on the order of days) changes in concentrations of air pollutants and short-term changes in mortality. “Chronic mortality” refers to long-term effects of air pollution (on the order of years). The individual YOLL are summed up to total YOLL for the whole affected population. Mortality studies usually measure changes in mortality rates of the population. Non-trivial extra steps are needed to convert mortality rates into YOLL.

The major pollutants contributing to mortality due to the electricity sector in China are shown in Figure 3. Sulfur dioxide causes some health damages directly, but its main impact is due to sulfates (i.e. secondary particulates). Other important contributors are nitrates from NOx emissions and primary particulates.

	Sulfates:		Nitrates:
		+
	Sulfur Dioxide:		Primary Particulates:
+		+
			Total:
		=

Figure 3: Years of Life Lost (YOLL) due to air emissions from China’s power plants.

Valuation

For decision making, two basic questions arise:

The first issue arises if two systems are available which would cost the same but which would cause different impacts. The first alternative may slightly increase morbidity (e.g. due to particulates emissions in a city), the second alternative may cause large impacts on crops (e.g. due to high sulfur dioxide emissions in the countryside). Which alternative should be preferred in such a case?

Furthermore, for decision making, the negative consequences of emissions must be compared to the negative consequences of efforts which would be necessary to reduce the emissions. Speaking in terms of costs, the damage costs must be compared to the abatement costs.

One practical way to resolve these issues is to use money for valuation i.e. to measure the variety of impacts like different diseases or yield losses of different crops in monetary terms. The monetization makes different impacts comparable and allows a comparison with abatement costs. (An alternative way of comparison is Multi-Criteria Decision Analysis (MCDA))

To obtain the damage costs, one multiplies the number of impacts (for example, the number of hospital admissions) by the cost per case (US$ per hospital admission). For health impacts, the unit costs include the cost of illness, wage and productivity losses, which are market based factors, as well as non-market costs that take into account an individual's willingness-to-pay (WTP) to avoid the risk of pain and suffering. WTP estimates are obtained by asking individuals how much money they are willing to pay to achieve a benefit. For mortality impacts, one needs to determine the Value of a Life Year Lost (VLYL), which is related to the so called Value of Statistical Life (VSL), the amount of money that society is willing to pay to avoid an anonymous premature death.

Figure 4 shows an example of external costs due to an emission source located in the Chinese city Jinan.

Figure 4: External costs per ton of pollutant emitted from a high stack (>100m) emission source located in Jinan, China (US$2000/ton).