Flows of Air Pollution, Ill Health and Welfare

Anni Huhtala and Eva Samakovlis

Environmental & Resource Economics, 2007, vol. 37, issue 2, 445-463

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

Keywords: defensive expenditures; externalities; green accounting; respiratory illnesses; I10; O4; Q25 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s10640-006-9033-z

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