Benefit, cost, and size of an emission control area: a simulation approach for spatial relationships. Issue 5 (4th July 2019) - Okada, Akira
ABSTRACT: International Maritime Organization has established an international framework for emission control areas (ECAs) to reduce air pollutants from shipping and several countries have designated ECAs in their territories. The world's ECAs seem to be molded eventually by demarcation lines according to the international laws of the sea, but are not set elastically solely based on a cost-benefit analysis. The existing literature does not pay careful attention to the relationship between ECA expansion and its costs and benefits. This study analyzes the spatial relationship between the net benefit and the size of ECA by using a numerical simulation that includes the decision-making required to alter ships' locations in the sea as well as a dispersion model of air pollutant. The simulation provides the net benefit curve, the decomposition of benefit, marginal cost curve, and the moving average marginal benefit curve, which are intersected by three points. Changing principal parameters in the simulation, such as the value of statistical life, the population density, and the premium of low-sulfur fuel clarifies their relationships with ECA size. The results provide an evaluation of the distance of existing ECA boundaries from seashores and a guideline for setting ECAs.