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Why health matters in the energy efficiency–energy consumption nexus? Some answers from a life cycle analysis

Sondès Kahouli () and Xavier Pautrel ()
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Sondès Kahouli: UMR AMURE – Université de Bretagne Occidentale
Xavier Pautrel: GRANEM & TEPP

No 2022.04, Working Papers from FAERE - French Association of Environmental and Resource Economists

Abstract: This paper shows that accounting for the growing interdisciplinary literature supporting the causality between energy efficiency and health and the empirical evidence re-assessing the importance of health in workforce productivity, could explain a part of the paradoxal relationship found between energy efficiency and energy consumption. We build a 3-period overlapping generations model where we assume that residential energy inefficiency induces chronic disease for adults and bad health for elderly. We also assume that workers’ health has an effect of their labor productivity. Our results suggest, in particular, that if mostly old (respectively young) people health is affected, the health impact of residential energy efficiency should have a backfire (resp. rebound) influence on residential energy consumption, by promoting precautionary saving (resp. by rising labor productivity). In policy terms, by showing that the link between energy efficiency and energy consumption is far from being just associated with technical conditions about preferences and/or production technology, our research emphasizes how crucial and complex are for governments the discussion and policy action dealing with the connection between energy conservation policies, health insurance system and growth.

Keywords: Energy; Health; Precautionary saving; Labor productivity; Overlapping generations model (search for similar items in EconPapers)
JEL-codes: D58 Q43 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2022-07
New Economics Papers: this item is included in nep-dge and nep-ene
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