Thoughts on the Economics of Secondary Benefits between Climate Change Mitigation and Air Pollution Regulation

Secondary benefits (or costs), otherwise known in the literature as co-benefits or ancillary benefits, are the added net benefits that can be attributed to policies that are above and beyond the primary benefits of climate policies. For example, the primary benefit of greenhouse gas emission reduction is to reduce the magnitude of future climate change; the secondary benefits are expressed in terms of changes in the patterns and concentrations of other pollutants and their secondary compounds. The paper follows a brief review of studies that attempted to quantify health co-benefits with a discussion of the basic underlying economic structure built on first principles of economic thought. It not only portrays the complexity that erupts when there are multiple and interdependent positive or negative externalities across different sources, but also examines several, sometimes surprising conjectures that apply more widely to secondary benefit considerations of all stripes. Concludes remarks synthesize these conjectures for health contexts, for more general policy evaluations beyond the health sphere, and for aggregate constructions such as the social cost of carbon.