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Measuring welfare loss caused by air pollution in Europe: A CGE analysis

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  • Nam, Kyung-Min
  • Selin, Noelle E.
  • Reilly, John M.
  • Paltsev, Sergey

Abstract

To evaluate the socio-economic impacts of air pollution, we develop an integrated approach based on computable general equilibrium (CGE). Applying our approach to 18 western European countries shows that even there, where air quality is relatively high compared with other parts of the world, health-related damages caused by air pollution may be substantial. We estimate that as of 2005, Europe experienced an annual loss in consumption of about 220 billion Euro in year 2000 prices (about 3% of total consumption) with a range based on 95% high and low epidemiological response functions of 107-335 billion Euro and a total welfare loss of about 370 billion Euro (range of 209-550) including both consumption and broader welfare losses (around 2% of welfare level) due to the accumulated effects of three decades of air pollution in Europe. In addition, we estimate that a set of air quality improvement policy scenarios as proposed in the 2005 CAFE program would bring 18 European countries as a whole a welfare gain of 37-49 billion Euro (year 2000 prices) in year 2020 alone.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 38 (2010)
Issue (Month): 9 (September)
Pages: 5059-5071

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Handle: RePEc:eee:enepol:v:38:y:2010:i:9:p:5059-5071

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Air pollution Human health Europe;

References

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  1. Williams III, Roberton C., 2003. "Health effects and optimal environmental taxes," Journal of Public Economics, Elsevier, vol. 87(2), pages 323-335, February.
  2. Alan fnKrupnick & Kenneth fnHarrison & Eric fnNickell & Michael fnToman, 1996. "The value of health benefits from ambient air quality improvements in Central and Eastern Europe: An exercise in benefits transfer," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(4), pages 307-332, June.
  3. Xander Olsthoorn & Markus Amann & Alena Bartonova & Jocelyne Clench-Aas & Janusz Cofala & Kees Dorland & Cristina Guerreiro & Jan Henriksen & Huib Jansen & Steinar Larssen, 1999. "Cost Benefit Analysis of European Air Quality Targets for Sulphur Dioxide, Nitrogen Dioxide and Fine and Suspended Particulate Matter in Cities," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 14(3), pages 333-351, October.
  4. Denise Van Regemorter & Inge Mayeres, 2004. "Modelling the health related benefits of environmental policies and their feedback effects, a CGE analysis for the EU countries with GEM-E3," Computing in Economics and Finance 2004 39, Society for Computational Economics.
  5. Roberton C. Williams, 2000. "Environmental Tax Interactions When Pollution Affects Health or Productivity," NBER Working Papers 8049, National Bureau of Economic Research, Inc.
  6. Burtraw, Dallas & Krupnick, Alan & Palmer, Karen & Paul, Anthony & Toman, Michael & Bloyd, Cary, 2003. "Ancillary benefits of reduced air pollution in the US from moderate greenhouse gas mitigation policies in the electricity sector," Journal of Environmental Economics and Management, Elsevier, vol. 45(3), pages 650-673, May.
  7. Krupnick, Alan, et al, 2002. " Age, Health and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents," Journal of Risk and Uncertainty, Springer, vol. 24(2), pages 161-86, March.
  8. Aunan, Kristin & Fang, Jinghua & Vennemo, Haakon & Oye, Kenneth & Seip, Hans M., 2004. "Co-benefits of climate policy--lessons learned from a study in Shanxi, China," Energy Policy, Elsevier, vol. 32(4), pages 567-581, March.
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Citations

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Cited by:
  1. CISCAR MARTINEZ Juan Carlos & FEYEN Luc & SORIA RAMIREZ Antonio & LAVALLE Carlo & PERRY Miles & RAES Frank & NEMRY Francoise & DEMIREL Hande & RÓZSAI Máté & DOSIO Alessandro & DONATELLI Marcello & , 2014. "Climate Impacts in Europe. The JRC PESETA II Project," JRC-IPTS Working Papers JRC87011, Institute for Prospective and Technological Studies, Joint Research Centre.
    • Ciscar, Juan-Carlos & Feyen, Luc & Soria, Antonio & Lavalle, Carlo & Raes, Frank & Perry, Miles & Nemry, Françoise & Demirel, Hande & Rozsai, Máté & Dosio, Alessandro & Donatelli, Marcello & Srivas, 2014. "Climate Impacts in Europe - The JRC PESETA II Project," MPRA Paper 55725, University Library of Munich, Germany.

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