Abstract

Temuco City is one of Chile and South America's most polluted urban areas. In this city, 90% of the emissions of fine particulate matter are explained by firewood heaters. Economic theory states that reducing emissions at minimum cost is possible if all emission sources equal their marginal abatement costs. However, no empirical study has solved this problem when pollution is caused exclusively by residential sources. Therefore, an optimization problem calibrated with microdata from households that consume firewood for heating is simulated, determining the alternatives to meet an aggregate emissions reduction target at minimum social cost. The options available for each household are replacing the current firewood heater with other less polluting heaters, thermal improvement of the dwelling, or maintaining the current firewood heater. The model results demonstrate that the most cost-effective option for most households is the adoption of pellet heaters when the aggregate target of reducing fine particulate matter emissions is less than 80%. Installing split inverter air conditioning (hot/cold) is also attractive for many households, especially when the reduction target is more demanding. Finally, it is demonstrated that aggregate target of 20%, 40%, 60%, or 80% can be achieved by prioritizing the replacement of firewood heaters in only 5%, 16%, 29%, or 52% of households with high firewood consumption and low-efficiency heaters.