Skip to main content
European Commission logo print header

Health, Labor and Environmental Regulation in Post-Industrial Europe

Periodic Reporting for period 2 - HEAL (Health, Labor and Environmental Regulation in Post-Industrial Europe)

Período documentado: 2022-02-01 hasta 2023-07-31

Environmental regulation in Europe dates back at least as far as the thirteenth century when the King of England banned the burning of sea-coal in London to mitigate air pollution. Today, environmental regulation is a top priority for policy makers in Europe and other post-industrial societies. An important reason for this is the emergence of a global climate crisis. Another reason is that more affluent societies have higher demands on environmental quality. This explains why the richest agglomerations in Europe have been adopting very costly measures to further reduce air pollution. Both global climate change and regional air pollution originate to a large extent from the combustion of fossil fuels, an activity that, in Europe, can be curbed only at steeply increasing marginal costs. Do the benefits justify these costs?

This project directly addresses this question by (i) developing state-of-the-art empirical models that greatly enhance spatial detail in economic impact analysis, (ii) taking an interdisciplinary approach that links causal inference on pollution emissions at the firm level to rigorous modeling of atmospheric dispersion for air pollutants, and (iii) incorporating subclinical and long-term health impacts of air pollution into estimates of the health benefits of clean air.
The project is divided in two parts. Part I develops a new interdisciplinary tool for studying the efficiency and distributional implications of changes in local air quality that arise as an unintended consequence of the European Union Emissions Trading Scheme (EU ETS) for carbon dioxide (CO2), the cornerstone of EU climate policy. The project team has collected and cleaned relevant data on such emissions. It has estimated statistical models linking air pollution emissions to key design features of the EU ETS such as the CO2 price and the total allowable amount of emissions. The team has also built a high-resolution model for tracking pollution emissions from the smoke stack to their final deposition in the atmosphere. The model spans all of Europe including parts of the former Soviet Union and features a high spatial resolution. The model explicitly accounts for chemical reactions during pollution transport that result in the formation of the fine particulate matter PM2.5 and allows for computing the public health burden of such pollution.

Part II uses rich worker-level data to study the impacts of air pollution on labor supply, long-term health outcomes and migration in a unified framework. Particular attention is given to the question of how health impacts of pollution interact with universal sick leave insurance which is a common feature of European welfare states.
The main objective of this project is to support evidence-based environmental policy making in Europe and elsewhere through the development of new empirical tools that bring together micro-econometric ex-post analysis and spatially detailed impact analysis. This is expected to deliver more credible results than ex-ante, simulation-based approaches that have been prevailing in the integrated assessment of environmental policies, in particular when those policies rely on market-based instruments that decentralize abatement decisions. At this intermediate stage, the project has achieved several important milestones and established proof of concept for this approach. Ongoing work will produce the first evidence on the health co-benefits of climate policy in Europe based on ex-post data. Such evidence is likely to have major implications for the design of such policies in Europe and elsewhere.