A Welfare Analysis of Climate Change Mitigation Policies

This paper assesses some welfare consequences of climate change mitigation policies. In the same vein as Becker, Philipson and Soares (2005), a simple index of economic progress weighs in the monetary cost induced by mitigation policies as well as the health benefits arising from the reduction in local air pollution. The shadow price of pollution is calculated indirectly through its impact on life expectancy. Taking into account the health benefits of mitigation policies significantly reduces their monetary cost in China and India, as well as in countries with large fossil-based energy-producing sectors (Australia, Canada and the United States).