Climate change damage and the trace gas index issue

Efficient policies to control trace gas emissions require estimation of an appropriate exchange rate among these gases; i.e. the relative value of reducing emissions of each gas. A dynamic stock pollutant model is developed that considers damages associated with both non-climatic and climatic effects of the gases, differing atmospheric lifetimes of the gases, the discount rate, and non-linear damages. The index value and shadow value of control are estimated for carbon dioxide, carbon monoxide, methane, nitrous oxide and the 4 major chlorofluorocarbons (CFCs). The value of control for short-lived relative to long-lives gases is lower for low discount rates and quadratic compared with linear damages. The relative value of control for all gases falls relative to carbon dioxide if one considers the direct beneficial effects of carbon dioxide on agriculture. The general approach developed in the paper may have application for other environmental problems where multiple substances pose individual risks but also jointly contribute to a single risk.The views expressed in this document are solely those of the authors and do not reflect the views of the U.S. Department of Agriculture or the United States government.We would like to acknowledge the helpful comments and suggestions of Bruce Larson, Dick Brazee, and Jae Edmonds while taking full responsibility for any remaining errors.