Air Pollution-induced Health Impacts on the National Economy of China: Demonstration of a Computable General Equilibrium Approach

At the present time, ambient air pollution is a serious public health problem in China. Based on the concentration-response relationship provided by international and domestic epidemiologic studies, the authors estimated the mortality and morbidity induced by the ambient air pollution of 2000. To address the mechanism of the health impact on the national economy, the authors applied a computable general equilibrium (CGE) model, named AIM/Material China, containing 39 production sectors and 32 commodities. AIM/Material analyzes changes of the gross domestic product (GDP), final demand, and production activity originating from health damages. If ambient air quality met Grade II of China's air quality standard in 2000, then the avoidable GDP loss would be 0.38%o of the national total, of which 95% was led by labor loss. Comparatively, medical expenditure had less impact on national economy, which is explained from the aspect of the final demand by commodities and the production activities by sectors. The authors conclude that the CGE model is a suitable tool for assessing health impacts from a point of view of national economy through the discussion about its applicability.