The indirect costs and benefits of greenhouse gas limitations: Hungary case study

A methodology has been developed which provides a framework for the assessment of the wider impacts arising from GHG limitation projects, and advice on how to incorporate them into the decision-making framework. The purpose of this report is to apply the methodology to a set of selected GHG limitation projects currently being considered for implementation in Hungary.

In total, four GHG limitation projects were selected for application of the methodology. This second phase of the research in Hungary, concentrated on four mitigation options in the household sector: Specifically, the selected GHG limitation projects involve: 1. The installation of new, better insulated windows. 2.

The installation of water saving devices on water taps. 3. The installation of active solar cells to prepare domestic hot water. 4. The replacement of traditional light bulbs by compact fluorescent bulbs. This study has shown the potential, as well as the current pratical limitations, of the methodology.

The value of the employment created has been estimated by adding gains in income effects with health effects. The environmental effects that have been quantified suggest that the reduction of pollution and associated health effects would be significant. The options that have been investigated are too small-scale to generate distributional impacts or macro-economic effects but the estimated effects on sustainability are positive and significant.

The principal policy conclusion that can be drawn from the analysis thus far is that it is imperative to consider indirect effects. It is possible that inclusion of indirect effects will make the net economic cost of an option negative thereby making it much more easy to 'sell' as a policy measure - though the assumptions will have to be made explicit and therefore defensible.