Climate Change 2001:
Working Group III: Mitigation
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7.2.2.3 Ancillary Benefits and Costs and Co-benefits and Costs


Figure 7.1: Mechanism for the Generation of Ancillary Impacts. Please note that climate change impacts are not discussed in this report, but in the Third Assessment Report of Working Group II.

The literature uses a number of terms to depict the associated benefits and costs that arise in conjunction with GHG mitigation policies. These include co-benefits, ancillary benefits, side benefits, secondary benefits, collateral benefits, and associated benefits. In the current discussion, the term “co-benefits” refers to the non-climate benefits of GHG mitigation policies that are explicitly incorporated into the initial creation of mitigation policies. Thus, the term co-benefits reflects that most policies designed to address GHG mitigation also have other, often at least equally important, rationales involved at the inception of these policies (e.g., related to objectives of development, sustainability, and equity). In contrast, the term ancillary benefits connotes those secondary or side effects of climate change mitigation policies on problems that arise subsequent to any proposed GHG mitigation policies. These include reductions in local and regional air pollution associated with the reduction of fossil fuels, and indirect effects on issues such as transportation, agriculture, land use practices, employment, and fuel security. Sometimes these benefits are referred to as “ancillary impacts”, to reflect that in some cases the benefits may be negative. From the perspective of policies to abate local air pollution, GHG mitigation may be an ancillary benefit.

Figure 7.1 illustrates the generation of ancillary benefits to GHG emission reduction policies.4 These policies operate through the economic and institutional system within a country and lead to reductions in GHGs, changes in other pollutants, and mitigation costs. Changes in GHG emissions in turn lead to changes in air and water pollution, which ultimately extend throughout the environment and feed back into the economy. Then, depending on baseline conditions, technologies, and institutions, such as labour markets, tax systems, and existing environmental and other types of regulations (represented by “institutions” in the economic system box), these feedbacks may become:

There appear to be three classes of literature regarding the costs and benefits of climate change mitigation:

  1. literature that primarily looks at climate change mitigation, but that recognizes there may be benefits in other areas;
  2. literature that primarily focuses on other areas, such as air pollution control, and recognizes there may be benefits in the area of climate mitigation; and
  3. literature that looks at the combination of policy objectives (climate change and other areas) and looks at the costs and benefits from an integrated perspective.

Each of these classes of literature may have their own preferred terms, and for class (3) it seems to be “co-benefits”. TAR acknowledges the relevance of all three, yet specifically wants to make the case for an integrated approach, linking climate change mitigation to the achievement of sustainable development and other policy objectives. Therefore, in this report, the term “co-benefits” is used only when speaking generically about the issue because of the limited availability of literature. The term “ancillary benefits” is used when addressing class (1) and (2) literature. Class (1) literature appears to be the most extensive; it is this literature on the ancillary benefits of climate change mitigation that is primarily covered in this section.

The discussion of ancillary impacts and/or co-benefits and costs, and the estimation of these are closely related to the concept of external cost, which is discussed below.


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