The Economic Consequences of Outdoor Air Pollution

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This report provides a comprehensive assessment of the economic consequences of outdoor air pollution in the coming decades, focusing on the impacts on mortality, morbidity, and changes in crop yields as caused by high concentrations of pollutants. Unless more stringent policies are adopted, findings point to a significant increase in global emissions and concentrations of air pollutants, with severe impacts on human health and the environment. The market impacts of outdoor air pollution are projected to lead to significant economic costs, which are illustrated at the regional and sectoral levels, and to substantial annual global welfare costs.

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Description of the ENV-Linkages model

The OECD’s in-house dynamic CGE model – ENV-Linkages – is used as the basis for the assessment of the economic consequences of climate impacts until 2060. The advantage of using a CGE framework to model climate impacts is that the sectoral details of the model can be exploited. Contrary to aggregated IAMs, where monetised impacts are directly subtracted from GDP, in a CGE model the various types of impacts can be modelled as directly linked to the relevant sectors and economic activities.

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