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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.

Suggested Citation

  • Nam, Kyung-Min & Selin, Noelle E. & Reilly, John M. & Paltsev, Sergey, 2010. "Measuring welfare loss caused by air pollution in Europe: A CGE analysis," Energy Policy, Elsevier, vol. 38(9), pages 5059-5071, September.
  • Handle: RePEc:eee:enepol:v:38:y:2010:i:9:p:5059-5071
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    1. repec:eee:eneeco:v:68:y:2017:i:c:p:478-489 is not listed on IDEAS
    2. Zhang, Shaohui & Worrell, Ernst & Crijns-Graus, Wina & Krol, Maarten & de Bruine, Marco & Geng, Guangpo & Wagner, Fabian & Cofala, Janusz, 2016. "Modeling energy efficiency to improve air quality and health effects of China’s cement industry," Applied Energy, Elsevier, vol. 184(C), pages 574-593.
    3. 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 & SRI, 2014. "Climate Impacts in Europe. The JRC PESETA II Project," JRC Working Papers JRC87011, Joint Research Centre (Seville site).
      • Ciscar, Juan-Carlos & Feyen, Luc & Soria, Antonio & Lavalle, Carlo & Raes, Frank & Perry, Miles & Nemry, Françoise & Demirel, Hande & Rozsai, Máté & Dosio, Alessandro & Donatelli, Marcello & Srivastav, 2014. "Climate Impacts in Europe - The JRC PESETA II Project," MPRA Paper 55725, University Library of Munich, Germany.
    4. Carbone, Jared C. & Kerry Smith, V., 2013. "Valuing nature in a general equilibrium," Journal of Environmental Economics and Management, Elsevier, vol. 66(1), pages 72-89.

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    Keywords

    Air pollution Human health Europe;

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