Modelling the health related benefits of environmental policies - a CGE analysis for the eu countries with gem-e3

22

employment, the real wage rate increases more in the model with feedback. There is
therefore an increase in the income available for consumption which explains why
private consumption is increased by more in the extended model version.

Table 6 also shows that the local benefits are smaller in the model with
feedback. This is because part of the ex-post air pollution costs of the standard GEM-E3
model are now included directly in the utility and production functions.

Table 6: The macro-economic impacts of the domestic CO2 tax

⁸ "Economic Evaluation of sectoral emission reduction objectives for climate change", ECOFYS Energy
and Environment the Netherlands, AEA Technology Environment UK, National Technical University
Athens Greece.

⁹ The same result is obtained in a sensitivity run where the damage figures were increased.

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