Green tax effect on Iran’s health sector: A general equilibrium approach

Abstract

Despite positive aspects of energy consumption, their negative externalities i.e., environmental pollutions, are considerable. Green taxes, paid for products and services that are not environmentally friendly, are recommended as an efficient way of improving health indices. Since, Iran is among the countries with high per capita consumption of energy, pollution can be a kind of threat. In this regard, to simulate the effect of green taxes on Iran's health sector, we use a general equilibrium model, calibrated by Iran's Social Accounting Matrix (SAM) in 2011. The results show green taxes reduces all kinds of environmental pollutions. Furthermore, 62% of health costs are spent on mortality, 26.4% on morbidity, and 11.6% on non-health effects.