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

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

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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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
Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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  1. Roberton C. Williams, 2000. "Environmental Tax Interactions When Pollution Affects Health or Productivity," NBER Working Papers 8049, National Bureau of Economic Research, Inc.
  2. 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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  7. 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.
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  9. 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.
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