International Review of Environmental and Resource Economics > Vol 14 > Issue 1

Assessing the Benefits of Air-Quality Improvements in General Equilibrium: A Review

Jared C. Carbone, Division of Economics and Business, Colorado School of Mines, USA, jcarbone@mines.edu , Yuzhou Shen, Division of Economics and Business, Colorado School of Mines, USA, shen@mymail.mines.edu
 
Suggested Citation
Jared C. Carbone and Yuzhou Shen (2020), "Assessing the Benefits of Air-Quality Improvements in General Equilibrium: A Review", International Review of Environmental and Resource Economics: Vol. 14: No. 1, pp 1-36. http://dx.doi.org/10.1561/101.00000113

Publication Date: 07 Apr 2020
© 2020 J. C. Carbone and Y. Shen
 
Subjects
Environmental Economics,  Health Economics,  Labor Economics:Labor Supply,  Public Economics:Public Goods
 
Keywords
JEL Codes: D58I12Q51Q53
Air pollutionhealth behaviornon-market valuesgeneral equilibriumcost-benefit analysis
 

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In this article:
1. Introduction 
2. A Unifying Framework for Studying CGE Air-Quality Impacts 
3. Current Literature 
4. Research Challenges 
5. Conclusion 
References 

Abstract

The vast majority of existing attempts to measure the benefits and costs of air-quality regulations assume no interaction between the behavioral responses that determine the market-based costs of these policies and the targeted environmental benefits themselves. Nevertheless, general equilibrium theory suggests a number of channels through which important interdependencies might arise, including health impacts on labor supply and the demand for medical care, complementarities between air quality and demand for leisure activities, and interactions between multiple services derived from a common, impacted ecosystem. We develop a unified theoretical framework to assess the nascent literature focused on incorporating air-quality impacts into general equilibrium models. Our primary focus is on quantitative studies employing computable general equilibrium (CGE) models. We conclude by identifying priorities for future research in this field.

DOI:10.1561/101.00000113