Costs of Climate Policy when Pollution Affects Health and Labour Productivity. A general Equilibrium Analysis Applied to Sweden
AbstractMuch of the debate over global climate change involves estimates of the direct costs of global climate change mitigation. Recently this debate has included the issue of ancillary benefits. These benefits consist mainly of health improvements. Although it is generally acknowledged that air pollution affects respiratory health, and that valuations of these impacts make up a significant proportion of the damage costs of air pollution, these impacts are often neglected when evaluating the costs of climate policy. Since reducing greenhouse gases has the effect of also reducing other pollutants affecting human health and labour productivity these effects should be taken into consideration. The analysis incorporates a linkage between air pollution and health effects into a general equilibrium model for Sweden through a theoretical consistent framework. Results from recent Swedish concentration-response and contingent valuation studies are used to model direct disutility and indirect health effects that negatively affects the productivity of labour. The costs of feedback effects on health and productivity are compared in three different scenarios for attaining the Swedish carbon dioxide target with alternative projected emission levels in the baseline scenario as well as alternative harmful emission levels. Results show that not including feedback effects could mean overstating the costs of climate policy. The magnitude of these effects are, however, very sensitive to projected emission levels and to the judgement of harmful emission levels.
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Bibliographic InfoPaper provided by National Institute of Economic Research in its series Working Paper with number 93.
Length: 24 pages
Date of creation: 28 Dec 2004
Date of revision:
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More information through EDIRC
air pollution; ancillary benefits; climate policy; general equilibrium; health;
Find related papers by JEL classification:
- D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
- I10 - Health, Education, and Welfare - - Health - - - General
- Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Costs; Distributional Effects; Employment Effects
- Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-01-16 (All new papers)
- NEP-ENE-2005-01-16 (Energy Economics)
- NEP-ENV-2005-01-16 (Environmental Economics)
- NEP-HEA-2005-01-16 (Health Economics)
- NEP-RES-2005-01-16 (Resource Economics)
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