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Modelling the health related benefits of environmental policies and their feedback effects, a CGE analysis for the EU countries with GEM-E3

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  • Denise Van Regemorter
  • Inge Mayeres

Abstract

A number of recent studies on taxation in the presence of externalities in a second-best framework consider the implications of taking into account the feedback effects of environmental quality. This paper explores by means of GEM-E3, a computable general equilibrium model for the EU countries, the importance of the feedback effects of the health related benefits from an environmental policy. The modelling framework implemented in GEM-E3 allows for three channels through which the feedback can occur: a decrease in medical expenditure, an increase in the consumers" available time and an increase of labour productivity in the production sectors. The results show that the explicit modelling of the health related effect of air pollution on consumers and producers allows for a better evaluation of the impact of environmental policies on private consumption and employment. However, in terms of global effect, the impacts of the feedback are small, compared to the standard GEM-E3 model where the health related benefits are evaluated ex-post

Suggested Citation

  • 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.
    • Handle: RePEc:sce:scecf4:39
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    References listed on IDEAS

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    1. Inge Mayeres & Stef Proost, 1997. "Optimal Tax and Public Investment Rules for Congestion Type of Externalities," Scandinavian Journal of Economics, Wiley Blackwell, vol. 99(2), pages 261-279, June.
    2. Gerking, Shelby & Stanley, Linda R, 1986. "An Economic Analysis of Air Pollution and Health: The Case of St. Louis," The Review of Economics and Statistics, MIT Press, vol. 68(1), pages 115-121, February.
    3. Jennifer Chung–I Li, 2002. "Including the Feedback of Local Health Improvement in Assessing Costs and Benefits of GHG Reduction," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 14(3), pages 282-304, November.
    4. Williams, Roberton III, 2002. "Environmental Tax Interactions when Pollution Affects Health or Productivity," Journal of Environmental Economics and Management, Elsevier, vol. 44(2), pages 261-270, September.
    5. Jesse Schwartz & Robert Repetto, 2000. "Nonseparable Utility and the Double Dividend Debate: Reconsidering the Tax-Interaction Effect," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 15(2), pages 149-157, February.
    6. repec:bla:scandj:v:99:y:1997:i:2:p:261-79 is not listed on IDEAS
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    Cited by:

    1. V. Kerry Smith & Min Qiang Zhao, 2016. "Evaluating Economy-Wide Benefit Cost Analyses," NBER Working Papers 22769, National Bureau of Economic Research, Inc.
    2. Magnani, Natalia & Vaona, Andrea, 2013. "Regional spillover effects of renewable energy generation in Italy," Energy Policy, Elsevier, vol. 56(C), pages 663-671.
    3. 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.
    4. Omolo, Miriam W.O., 2014. "Construction of Social Accounting Matrix for Kenya 2009," Conference papers 332512, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    5. Nathalie Mathieu-Bolh & Xavier Pautrel, 2014. "Environmental taxation, health and the life-cycle," Working Papers hal-00990256, HAL.
    6. repec:hal:wpaper:hal-00930936 is not listed on IDEAS
    7. Gjorgiev, Blazhe & Garrison, Jared B. & Han, Xuejiao & Landis, Florian & van Nieuwkoop, Renger & Raycheva, Elena & Schwarz, Marius & Yan, Xuqian & Demiray, Turhan & Hug, Gabriela & Sansavini, Giovanni, 2022. "Nexus-e: A platform of interfaced high-resolution models for energy-economic assessments of future electricity systems," Applied Energy, Elsevier, vol. 307(C).
    8. 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.
    9. Tourdyeva, Natalia & Bogatova, Irina & Vartanov, Sergey & Denisova, Irina & Chubarova, Tatiana & Shakleina, Marina & Polterovich, Victor, 2021. "Расчетная Модель Общего Равновесия Для Оценки Экономического Эффекта Ранней Диагностики Болезни Паркинсона [Computable general equilibrium model for assessing the economic effect of early diagnosis," MPRA Paper 105182, University Library of Munich, Germany.
    10. Jared C.Carbone & Yuzhou Shen, 2019. "Assessing the Benefits of Air-Quality Improvements in General Equilibrium: A Review," Working Papers 2019-05, Colorado School of Mines, Division of Economics and Business.

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    More about this item

    Keywords

    applied general equilibrium model; non-separable externalities; CO2 tax; environment; ancillary benefits;
    All these keywords.

    JEL classification:

    • D58 - Microeconomics - - General Equilibrium and Disequilibrium - - - Computable and Other Applied General Equilibrium Models
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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