Article thumbnail

Modelling the health related benefits of environmental policies - a CGE analysis for the eu countries with gem-e3

By Inge Mayeres and Denise Van Regemorter


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.applied general equilibrium model, non-separable externalities, CO2 tax, environment, ancillary benefits

OAI identifier:

To submit an update or takedown request for this paper, please submit an Update/Correction/Removal Request.

Suggested articles


  1. (1986). An Economic Analysis of Air Pollution and Health: The Case of St. Louis,
  2. (1999). Climate Technology Strategies 2, The macroeconomic cost and benefits of reducing greenhouse gas emissions in the European Union,
  3. (1999). Environmental Taxation and the Double Dividend,
  4. (1998). Equitable and Efficient Allocation of Air Pollution in a Federation – Confronting Partial and General Equilibrium Analysis of a Pigouvian Tax, paper presented at the NBER workshop on Public Policy and the Environment,
  5. (1996). Externalities of Energy,
  6. (2000). GEM-E3-ELITE, European emission mitigation policy and technological evolution: economic evaluation with the GEM-E3-EG model, final report for DG RES.
  7. (2003). Health Effects and Optimal Environmental Taxes,
  8. III (2002), Environmental Tax Interactions when Pollution Affects Health or Productivity,
  9. (2002). Including the Feedback of Local Health Improvement
  10. (1997). Optimal Tax and Public Investment Rules for Congestion Type of Externalities,
  11. (2001). Tax Reform, Externalities and Income Distribution,
  12. (2003). The Measurement of Environmental and Resource Values, Theory and Methods, Resources for the Future,