Beyond Strict Regulations to Achieve Environmental and Economic Health—An Optimal PM 2.5 Mitigation Policy for Korea

Kyungwon Park, Taeyeon Yoon, Changsub Shim, Eunjin Kang, Yongsuk Hong and Yoon Lee
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Kyungwon Park: Global Sustainable Development Economic Institute, Sunmoon University, Asan 31460, Korea
Taeyeon Yoon: Department of International Economics and Trade & Global Sustainable Development Economic Institute, Sunmoon University, Asan 31460, Korea
Changsub Shim: Division for Atmospheric Environment, Climate, Air Quality and Safety Research Group, Korea Environment Institute (KEI), Sejong 30147, Korea
Eunjin Kang: Department of Environmental Engineering, Korea University, Sejong 30019, Korea
Yongsuk Hong: Department of Environmental Engineering, Korea University, Sejong 30019, Korea
Yoon Lee: Department of International Economics and Trade & Global Sustainable Development Economic Institute, Sunmoon University, Asan 31460, Korea

IJERPH, 2020, vol. 17, issue 16, 1-16

Abstract: Growing concern about particulate matter (PM 2.5 ) pressures Korea to reduce the health risks associated with its high dependency on fossil fuels. The Korean economy relies heavily on large thermal power plants—a major source of PM 2.5 emissions. Although air quality regulations can negatively impact local economies, the Korean government announced two strict air quality mitigation policies in 2019. We develop a regional static computable general equilibrium model to simulate the economic and environmental impacts of these polices under alternative hypothetical scenarios. We separate two regions, Chungcheongnam-do, the most polluted region, and the rest of the country, in our model. As policy options, we introduce a regional development tax and a tradable market for PM emission permits, similar to an air pollution tax and a carbon permits market, respectively. The results show that allowing higher tax rates and a tradable permits market gives the optimal combination, with the PM 2.5 emissions reduced by 2.35% without sacrificing economic growth. Since alternative options present, for example, a 0.04% loss of gross domestic product to reduce PM emissions by the same amount, our results here may present a new policy paradigm for managing air pollutants such as PM 2.5 .

Keywords: air pollutants; particulate matter (PM 2.5 ); thermal power generation; auxiliary benefit; regional computable general equilibrium model (search for similar items in EconPapers)
JEL-codes: I I1 I3 Q Q5 (search for similar items in EconPapers)
Date: 2020
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