Simulation of Green Tax Effects on Health Indicators and Welfare in Iran: General Equilibrium Model of Economy, Energy and Environment (GEM-E3)

Iran is among the countries with a high per capita consumption of energy. Despite the positive aspects of energy consumption, the negative side effects cannot be ignored. The environmental pollution is considered to be the most important environmental risk to health globally. Therefore, it is essential to receive green tax in order to reduce the threats to the environment and the people’s health. This study uses a general equilibrium model to consider the effects of different sectors of the economy, energy, environment and health sectors on simulating the effect of green tax on emission of pollutants, health indicators and welfare in Iran's economy. The model is calibrated with the data from the Social Accounting Matrix of 2011 in Iran and the endogenous variables of the model are calculated using the MCP technique and using the GAMS software. The results of the study showed that by applying the green tax policy, the spread of all pollutants in various degrees is always reduced. However, due to increasing the welfare of whole community, considering the effects of applying this policy on the health sector, green tax on energy inputs are proposed to prevent the increase in health costs caused by air pollution.