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Flows of Air Pollution, Ill Health and Welfare

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  • Anni Huhtala
  • Eva Samakovlis

Abstract

We provide a theoretical framework for measuring welfare when pollution influences economic growth by impairing health and driving up defensive medical expenditures. We demonstrate the usefulness of our framework in practice by applying it to data from Swedish valuation studies designed according to the accounting principles suggested here. We estimate that the negative health effects of nitrogen dioxide emissions amount to 0.6% of GDP in Sweden. We also show that a corrective Pigouvian tax should internalize the direct disutility, reduced labor productivity, and increased healthcare expenditures caused by pollution. According to our calculations, harmful health impacts alone (excluding ecosystem effects) justify 65% of the current Swedish tax on nitrogen dioxide. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Anni Huhtala & Eva Samakovlis, 2007. "Flows of Air Pollution, Ill Health and Welfare," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(2), pages 445-463, June.
    • Handle: RePEc:kap:enreec:v:37:y:2007:i:2:p:445-463
    DOI: 10.1007/s10640-006-9033-z
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    References listed on IDEAS

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    1. David E. Bloom & David Canning & Jaypee Sevilla, 2001. "The Effect of Health on Economic Growth: Theory and Evidence," NBER Working Papers 8587, National Bureau of Economic Research, Inc.
    2. William D. Nordhaus, 2002. "The Health of Nations: The Contribution of Improved Health to Living Standards," NBER Working Papers 8818, National Bureau of Economic Research, Inc.
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    1. repec:hal:wpaper:hal-00930936 is not listed on IDEAS
    2. Hambur Wang, 2024. "Can ESG Investment and the Implementation of the New Environmental Protection Law Enhance Public Subjective Well-being?," Papers 2411.06110, arXiv.org.
    3. Mathieu-Bolh, Nathalie & Pautrel, Xavier, 2016. "Reassessing the effects of environmental taxation when pollution affects health over the life-cycle," Economic Modelling, Elsevier, vol. 52(PB), pages 310-321.
    4. Ibsa Mussa & Awel Feku & Mohammed Mussa, 2018. "Environmental Accounting and Auditing and Eco mark," Current Investigations in Agriculture and Current Research, Lupine Publishers, LLC, vol. 5(3), pages 660-662, November.
    5. Nathalie Mathieu-Bolh & Xavier Pautrel, 2014. "Environmental taxation, health and the life-cycle," Working Papers hal-00990256, HAL.

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    More about this item

    Keywords

    defensive expenditures; externalities; green accounting; respiratory illnesses; I10; O4; Q25;
    All these keywords.

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water

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