Costs and effectiveness of measures to reduce SO2-emissions : a decision support analysis

Abstract

The damage to forests observed in the central and southern parts of the Federal Republic of Germany has increased very rapidly over the past two years. Most scientists believe that S02-and NOx-emissions are the main reasons for this damage. This demands the immediate initiation of countermeasures. Since the benefits of these measures cannot be calculated exactly, political decisions have to be made under conditions that are uncertain. The paper demonstrates how and to what extent a cost-effectiveness analysis is able to support a rational decision process under these circumstances. The investigation area is Baden-Wurrtemberg, a state situated in the southwest of the Federal Republic of Germany. First, a reference scenario is defined which describes the possible development of the electricity supply system. Then measures to reduce SO2-missions are collected and described. Measures required by law (for instance, installation of flue-gas desulphurization by July 1988), are not considered, since they are part of the reference scenario. A cost-effectiveness ratio - that is the amount of money needed to reduce the emissions by one kilogram of SO2 - is evaluated for every measure considered. Measures with a cost-effectiveness ratio that is lower than or equal to that of measures required by law are recommended. Regional electricity suppliers have agreed to put these measures into effect. Realization of these measures will reduce So2-emissions in Baden-Württemberg by approximately 25%, or 19000 t S02 per year, during the period 1984 to 1988. Experience shows that a carefully executed cost-effectiveness analysis can be a valuable input to a decision making process in an uncertain environment by evaluating and ranking the costs and effects of the SO2-reduction measures that are at our disposal.