The effect of health benefits on climate change mitigation policies

Abstract

This paper studies the interplay between climate, health, and the economy in a stylized world with eleven heterogeneous regions, with special emphasis on USA, Europe, China, India, and Africa. We introduce health impacts into a simple economic integrated assessment model where both the local cooling effect of SO2and the global warming effect of CO2are endogenous, and investigate how these factors affect the equilibrium path. Regions do not respond in the same way to climate change. In particular, emission abatement rates and health costs depend on the economic and geographical characteristics of each region. Two policy scenarios are considered, Nash and Optimal, for which we present both global and regional results. Results for Africa and China are highlighted.