Linking health and productivity impacts to climate policy costs: a general equilibrium analysis

Much of the debate on global climate change has focused on direct costs of mitigation. Recently this debate has included the issue of ancillary benefits. The present analysis incorporates a linkage between air pollution and ancillary health benefits into a general equilibrium model applied to Sweden. Direct disutility and indirect health effects are modelled using concentration-response and contingent valuation data. Health benefits are compared in three scenarios for attaining the Swedish carbon dioxide target with alternative projected and harmful emission levels. Results show that the costs of climate policy could be overstated when not accounting for ancillary health benefits.

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