ECONOMIC IMPACTS OF CLIMATE CHANGE AND AIR POLLUTION IN CHINA THROUGH HEALTH AND LABOR SUPPLY PERSPECTIVE: AN INTEGRATED ASSESSMENT MODEL ANALYSIS

Abstract

An energy supply dominated by the use of fossil fuels causes both climate change and air pollution, which have negative impacts on human capital via both health and productivity. In addition, different people are affected differently because of factors such as age, gender and education level. To enhance the understanding of the benefits of low carbon transition from the labor supply perspective and help to identify strategies of collaborative control for CO2 and local air pollutants in China, an integrated assessment model linking the air quality module and the health impact module with a disaggregated labor sector computable general equilibrium (CGE) economic system is developed and applied in this study. Results show some key findings. First, renewable energy development and carbon capture and storage (CCS) technologies will contribute significantly to GDP in terms of their impact on air quality improvement by 0.99% and 0.54%, respectively, in 2050. Second, due to differences in labor composition, air pollution has, and will continue to have, the greatest impact on sectors with a higher proportion of male and lower-educated workers — such as the coal sector, and it will have the least impact on sectors with a higher proportion of female and higher-educated workers — such as the public administration sector. Third, the different impacts of sector output will increase economic inequality. Highlights • The economic impact of climate change and air pollution is assessed. • A CGE model with disaggregated labor sectors is developed. • The secondary industry is most affected by pollution from a health perspective. • Low-income groups suffer the largest loss of income due to pollution. • A low carbon policy will improve air quality and economic equity.