Climate and Planetary Health Economics

Why this matters in health economics

Healthcare is a heavy industry. Delivering care consumes energy, pharmaceuticals, single-use plastics, freight, buildings, and business travel, and the resulting emissions are large — health systems are consistently estimated to account for a significant share of national greenhouse-gas emissions in high-income countries, and the global health sector's footprint is on the scale of a major emitting economy. A sector whose founding ethic is "first, do no harm" is, in aggregate, harming the very population health it exists to protect. That paradox is now a governance question for any director who signs off a procurement, a building, or a care pathway.

The stakes cut two ways. Climate change is already a driver of future health costs through its effects on human health: heat raises cardiovascular and renal mortality, shifts the range of infectious diseases, worsens air quality, and loads emergency and mental-health services during floods, wildfires, and storms. At the same time, the actions that cut emissions — cleaner air, active travel, healthier diets, warmer homes — often improve health directly and quickly, which changes the economics of climate policy in favour of acting. For a health economist, these are not soft externalities to note in a footnote; they move cost-effectiveness ratios, budget forecasts, and equity outcomes.

Ignoring climate is therefore not a neutral choice but a hidden liability. Assets built without heat resilience will be retrofitted at a premium; carbon-intensive supply chains face rising carbon prices and disruption; and a system that cannot describe its own footprint cannot manage it. Public money and public trust both reward institutions that count these costs honestly and act on them proportionately.

Core concepts

Planetary health is the framing idea: human health depends on the health of natural systems — a stable climate, clean air and water, biodiversity — and degrading those systems degrades health. It reframes healthcare not as a closed system optimizing its own outputs but as one actor inside interdependent ecological limits. The related One Health concept links human, animal, and environmental health, and matters for emerging infectious disease.

The carbon footprint of care is the total greenhouse gas emissions attributable to producing and delivering health services, usually expressed in carbon-dioxide equivalent. Footprints are conventionally split into three scopes: direct emissions from owned sources such as boilers and anaesthetic gases (Scope 1); purchased energy (Scope 2); and the supply chain — pharmaceuticals, devices, food, freight, commissioned services (Scope 3), which typically dominates a health system's total. Measuring Scope 3 well requires life cycle assessment, which traces emissions from raw material through manufacture, use, and disposal, and it is where most of the difficulty and most of the opportunity lie.

The economics rests on two more ideas. The carbon footprint of care is a negative externality — a cost imposed on third parties (the future, other regions) that the decision-maker does not pay (general externality theory is owned by Chapter 1.3 — Market Failure; here we apply it). The social cost of carbon is the estimated economic damage, including health damage, caused by emitting one additional tonne of carbon dioxide; attaching it to health-service emissions converts a footprint into a monetized cost that can enter an appraisal. Estimates of the social cost of carbon vary widely with the discount rate and the damage assumptions used, so it should be handled as a range, not a point (see Chapter 2.1 — Economic Evaluation on discounting).

The concept that makes climate action attractive to health is co-benefits: a single measure yielding gains in more than one domain. Active travel cuts transport emissions and increases physical activity; reducing fossil-fuel combustion cuts emissions and air pollution at once; shifting diets toward plant-rich patterns lowers agricultural emissions and diet-related disease. Because many health co-benefits accrue locally and soon, while the climate benefit is global and slow, co-benefit accounting often justifies action on near-term health grounds alone.

Finally, sustainable healthcare and climate change mitigation within the sector — decarbonizing estates, supply chains, and care models toward net zero — must be distinguished from adaptation: making services resilient to heat, flood, and disruption. Both cost money and both save it; conflating them muddles the business case.

Best practices

1. Measure your footprint before you manage it, and start with Scope 3. You cannot decarbonize what you have not counted, and the temptation is to count the easy part — buildings and fleet — while ignoring the supply chain that usually contributes the majority of emissions. Commission a footprint that uses recognized accounting scopes and, for the largest categories (pharmaceuticals, medical devices, food), a life-cycle approach. Treat the first estimate as a directional map for prioritization, not a precise balance sheet.

2. Put a monetary value on carbon in every major appraisal. Attaching a social cost of carbon to the emissions of a pathway, a building, or a procurement makes the externality visible inside the same arithmetic as cost and health outcome, rather than as a separate moral appeal that loses to the budget line. Use a published, official carbon value where your jurisdiction sets one, and test the result across a range because the number is contested. This aligns climate with the opportunity-cost logic the rest of the book uses (see Chapter 2.1 — Economic Evaluation).

3. Lead with co-benefits and count the near-term health gains explicitly. The strongest health-economic case for climate action is usually not the distant, uncertain climate damage avoided but the immediate, local health improvement — fewer air-pollution deaths, more physical activity, warmer homes. Quantify these co-benefits in the currency the decision uses, whether that is quality-adjusted life years, avoided admissions, or averted costs. A measure that is marginal on carbon alone often becomes clearly worthwhile once its health dividend is on the ledger.

4. Prioritize interventions that cut carbon and cost and improve care together — the "triple wins". Some changes reduce emissions while saving money and improving outcomes: preventing disease so care is never needed, switching to lower-carbon clinical products of equal efficacy, cutting low-value activity, and reducing waste. Rank opportunities by this triple test rather than by carbon alone, because triple wins are self-financing and build the coalition needed for harder trade-offs later. Be honest that not every option is a triple win; some cost more, and those need a different justification.

5. Attack low-value care as climate policy. Every unnecessary test, duplicated scan, or ineffective treatment carries a carbon cost as well as a financial and clinical one, so disinvestment from low-value care (owned as a discipline by Chapter 3.3 — Rationing) is among the cleanest decarbonization levers available. It reduces Scope 3 emissions embedded in the products and activity avoided, with no loss — and often a gain — in patient outcome. Frame appropriate-care programmes explicitly as carbon-reduction programmes to unlock support from sustainability as well as finance.

6. Use procurement as your largest lever, and make suppliers compete on carbon. Because supply chain emissions dominate, the highest-leverage decarbonization tool most health systems hold is what and how they buy. Ask suppliers for product-level carbon data, weight carbon in tender scoring, set decarbonization expectations as conditions of contract, and favour reusable and reprocessed devices where clinically safe. National payers and large providers can move whole markets this way; small buyers should pool demand to gain the same leverage.

7. Separate mitigation and adaptation in the business case, and fund both. Decarbonizing a hospital and hardening it against a 40-degree heatwave are different investments with different benefits, and blending them hides where value comes from. Build resilience appraisals — cooling, backup power, flood defence, surge capacity — on avoided future health costs and service continuity; build mitigation appraisals on emissions and running-cost savings. Where a single measure does both, such as passive-cooling design that lowers energy use and improves heat safety, count both benefits but keep the logic legible.

8. Model climate as a driver of future demand and cost, and stress-test long-horizon plans against it. Workforce plans, estate strategies, and long-term financial models built on a stationary climate will under-provide for heat-related admissions, shifting infectious-disease burden, and event-driven surges. Incorporate plausible climate scenarios into demand forecasting and capital planning, using health impact assessment where a specific policy or development is in scope. Date-stamp the scenarios you use, because the science and the projections move.

9. Apply an equity lens, because climate harm and climate action are both unequally distributed. The populations least responsible for emissions often bear the most heat, flood, and pollution harm, and poorly designed climate measures — a blunt fuel levy, a cycling scheme only the affluent can use — can widen health inequalities (equity is owned by Chapter 3.4 — Equity; apply it here). Assess who gains and who loses from each measure, and design so the health co-benefits reach those with the greatest need. A decarbonization plan that worsens inequity fails on the book's core premise.

10. Report transparently against a dated, credible target and avoid greenwashing. Set an emissions-reduction trajectory with a base year and interim milestones, report progress on a consistent boundary, and be explicit about what offsets do and do not cover. Vague "net zero someday" claims without a measured baseline erode trust and invite scrutiny; a modest target met transparently beats an ambitious one asserted. Tie sustainability reporting into existing financial and quality governance so it is assured, not decorative.

11. Treat high-impact clinical hotspots as targeted projects. A small number of clinical products and practices carry outsized footprints — certain anaesthetic gases and propellant-based inhalers are widely cited examples — and switching to clinically equivalent lower-carbon alternatives can deliver large reductions from single decisions. Identify your hotspots from the footprint, engage the relevant clinical community on equivalence and patient choice, and run them as discrete improvement projects with measured before-and-after emissions.

12. Build climate competence into the finance and evaluation function, not just facilities. Sustainability is too often quarantined in an estates or corporate-responsibility team, disconnected from the health economists who model value. Give analysts the carbon values, life-cycle data, and methods to include emissions in routine appraisal, so climate becomes a standing dimension of value rather than a separate campaign. Capability here is what turns policy ambition into changed decisions.

Questions to discuss with your team

1. What is our system's actual carbon footprint, where does it concentrate, and how confident are we in the number? Most organizations can state their energy bill but not their supply-chain emissions, yet the supply chain is usually where the majority of the footprint sits. Push past the comfortable Scope 1 and 2 figures to an honest, if approximate, Scope 3 estimate, and be clear about the uncertainty in it. The point is not audit-grade precision but knowing whether your biggest lever is buildings, pharmaceuticals, devices, travel, or food — because that determines strategy. An honest answer will admit large uncertainty bands and name the two or three categories worth investigating first. Beware the failure of measuring only what is easy and then optimizing the small part.

2. When we appraise a major investment or pathway change, do we price carbon and count near-term health co-benefits — and if not, what decisions is that distorting? Standard business cases that omit the social cost of carbon systematically favour carbon-intensive options, while cases that omit health co-benefits systematically undervalue clean-air and active-travel measures. Ask which recent decisions might have gone differently had both been on the ledger, and whether your appraisal templates even have a place to enter them. A good answer names a concrete method — a carbon value applied across a range, co-benefits expressed in the same outcome currency as everything else — and assigns ownership for embedding it. It also acknowledges the tension: pricing carbon can raise the apparent cost of care, and leaders must be ready to defend that as honesty, not inefficiency.

3. Which climate risks will drive our future costs and demand, and are our long-horizon plans built for the climate we will have or the one we had? Estate strategies lasting decades, workforce pipelines, and financial models often assume a stationary climate, leaving services under-built for heat, flood, and shifting disease. Discuss which hazards most threaten your population and continuity of care, over what timescale, and who is exposed — because climate risk lands unequally on the poorest and the sickest. An honest answer distinguishes what you can adapt to affordably now from what needs long-lead capital, dates its assumptions because projections change, and resists both complacency and paralysing worst-casing. It should also connect to affordability: resilience competes for the same capital as everything else (see Chapter 2.5 — Budget Impact and Affordability).

4. How hard are we willing to use procurement as a decarbonization lever, and what would it cost us to make suppliers compete on carbon? Because supply-chain emissions usually dominate the footprint, the biggest lever most organizations hold is what and how they buy — yet weighting carbon in tenders, demanding product-level carbon data, and setting decarbonization as a contract condition all carry friction, and sometimes a price premium or a narrower field of bidders. Discuss whether your tender scoring has any carbon weighting today, whether you even receive the supplier data that would let you act, and where you have the market power to demand change versus where you must pool demand with others to get it. An honest answer names the trade-off openly: a lower-carbon product may cost more or come from fewer suppliers, and someone must decide how much carbon weighting is proportionate. It also distinguishes where you are a price-taker from where your scale can genuinely move a market (see Chapter 3.10 — Strategic Purchasing and Commissioning). The strongest answer ties procurement carbon back to clinical equivalence, so no one trades safety for emissions.

5. Are we treating low-value care as a decarbonization strategy, or leaving that lever unpulled because it sits with a different team? Every unnecessary test, duplicated scan, and ineffective treatment carries embedded supply-chain carbon as well as financial and clinical cost, so disinvestment from low-value care is among the cleanest emission cuts available — it reduces Scope 3 with no loss, and often a gain, in patient outcome. Yet appropriate-care programmes are usually run by clinical-effectiveness or finance teams who never count the carbon, while sustainability teams chase estates and fleet. Discuss which low-value activities in your system carry the largest combined footprint, and whether framing their reduction explicitly as carbon reduction would unlock support you cannot get on cost alone. An honest answer admits that disinvestment is politically hard, names who loses when an activity stops, and connects the effort to the discipline that owns it (see Chapter 3.3 — Rationing). It resists the comfortable illusion that decarbonization must always mean spending more.

6. When our climate measures redistribute who gains and who loses, are we designing the health co-benefits to reach greatest need — or just assuming they trickle down? Climate harm falls hardest on those least responsible for it, and poorly designed climate action can widen health inequality: a blunt fuel levy hits the poorest households, an active-travel scheme can serve only the confident and affluent, and a cooling retrofit can land first where influence is greatest rather than where heat risk is worst. Discuss who bears the burden and who captures the benefit of each measure you are weighing, and whether your appraisal even asks that question. An honest answer treats distribution as a design input, not an afterthought — siting, targeting, and sequencing measures so the near-term health dividend reaches the most exposed and deprived (equity is owned by Chapter 3.4 — Equity; apply it here). It should also be candid that an equitable design sometimes costs more per tonne or per quality-adjusted life year, and that this is a defensible choice, not an inefficiency to hide.

In practice: a health economics example

The fictional metropolitan health directorate of San Sebastián del Mar, a hot, rapidly growing coastal city in a middle-income country, faces two pressures at once. Summer heatwaves are lengthening, and last year an extended hot spell drove a sharp, costly surge in cardiovascular, renal, and heat-illness admissions across its three public hospitals, straining a grid that failed twice. The directorate has a modest capital envelope and must choose how to spend it. The finance director wants the analysis to treat climate not as a cause to fund but as an economic problem to appraise.

The team scopes three candidate investments over a 15-year horizon: rooftop solar with battery storage across the hospital estate; a passive-cooling and shading retrofit of the busiest hospital plus a network of neighbourhood cooling centres in the lowest-income districts; and a heat-health early-warning and community-response programme run with primary care. They agree the perspective up front — a broad public-sector-plus-health perspective — and they price three things in every option: capital and running costs, avoided future health costs and quality-adjusted life years, and the carbon consequence valued at a published social-cost-of-carbon range (see Chapter 2.1 — Economic Evaluation).

The solar-plus-storage case turns out to be a mitigation-and-resilience double: it cuts Scope 2 emissions, valued at the carbon range, and it keeps critical care running through grid failures, valued as avoided disruption. Its running-cost savings alone come close to covering the capital over the horizon, so once the carbon value and resilience benefit are added it is clearly worthwhile. The passive-cooling and cooling-centre package is appraised on avoided heat mortality and admissions; because the team applies an explicit equity lens and sites the centres where exposure and deprivation are highest, the avoided health harm per unit spent is large, and the co-benefit of a cooler, lower-energy hospital adds a modest emissions saving. The early-warning programme is the cheapest and, per unit cost, averts the most acute harm, but its benefits depend on behaviour and are more uncertain.

The uncomfortable part is the trade-off the arithmetic exposes. Ranked purely on cost-effectiveness, the early-warning programme wins, but it does nothing for the underlying grid fragility or the estate's emissions; ranked on carbon, solar wins but saves fewer lives per unit cost this decade. The directorate resists collapsing this to a single number. It funds the early-warning programme first as the low-cost, high-yield adaptation, commits to solar-plus-storage on the strength of its running-cost and carbon case, and phases the cooling-centre package into deprived districts as capital allows — documenting that the plan is adaptation-led but mitigation-consistent. It date-stamps its heat projections and commits to revisiting them, and it publishes a base-year footprint so future progress is measurable. The economics did not remove the hard choice; it made the competing goods — lives now, emissions over time, equity, and continuity — visible and defensible.

Four sector lenses

Startup

A digital or medtech start-up sits mostly in other systems' Scope 3, so its climate value is largely what it enables in others: a remote-monitoring tool that prevents an admission, or a triage service that averts an unnecessary journey, avoids the embedded carbon of that avoided activity. The sharp move is to quantify and evidence that avoided-carbon claim with the same rigour as a clinical or cost claim, because buyers with net-zero targets increasingly weight it in procurement. Start-ups should also count their own footprint honestly — cloud compute, hardware, freight — and resist greenwashing, which large buyers now scrutinize. Early-stage ventures that can show a credible carbon-and-cost story gain a real edge in tenders (see Chapter 5.2 — Digital Health Economics).

Small business

An established small provider — a primary-care partnership, a single clinic, a dental practice, a care home, or a small device supplier — has a real but modest footprint it owns directly: energy, waste, travel, single-use consumables, and a handful of high-impact clinical items such as propellant inhalers or anaesthetic gases. Unlike a start-up chasing scale, it runs a steady-state business and can act on the no-regret triple wins now — switching to lower-carbon products of equal efficacy, cutting waste, reducing avoidable activity, and trimming an energy bill that comes straight off the bottom line. Its constraint is leverage and time: it cannot move a supply market alone and has no sustainability team, so it should pool demand through its network or purchasing group and lean on national frameworks rather than build bespoke analysis. Where it contracts with a larger payer, it can expect carbon to appear in tender scoring, so keeping simple, honest records of its own footprint is increasingly a condition of winning work. The pragmatic path is a short list of measured, self-financing changes rather than a grand strategy it lacks the capacity to run.

Enterprise

A large hospital group, integrated provider, or insurer owns a big, complex footprint concentrated in supply chain and estate, and has the scale to move markets. Its lever is procurement: demanding product-level carbon data, weighting carbon in tenders, setting supplier decarbonization conditions, and pooling demand to shift what manufacturers make. Enterprises can also run high-impact clinical hotspot projects — anaesthetic gases, inhalers, single-use devices — and fund mitigation from the running-cost savings decarbonization generates. The main risk is fragmentation: sustainability parked in estates while finance and clinical decisions ignore carbon, so the enterprise's job is to embed carbon into routine capital and pathway appraisal.

Government

A ministry, national payer, or regulator sets the frame everyone else optimizes within. It can mandate footprint reporting and net-zero trajectories, publish an official social cost of carbon for appraisal, build carbon into national health-technology-assessment and capital-approval rules, and align health decarbonization with wider climate, transport, and energy policy so co-benefits are captured across sectors (fiscal and policy levers are owned by Chapter 3.2 — Health Policy). Governments also carry the adaptation duty: heat-health plans, resilient infrastructure standards, and surveillance for shifting disease. National commitments — such as the NHS in England's legislated net-zero goal or the World Health Organization's climate-and-health programme — act as exemplars that set expectations others follow. The accountability is population-wide and long-horizon, so credibility rests on dated targets and transparent progress.

Common failure modes

• Counting only the easy emissions. Reporting Scope 1 and 2 while ignoring the dominant supply chain flatters the figure and misdirects effort. Fix: estimate Scope 3 early, even roughly, and prioritize from the whole picture.
• Treating climate as separate from value. Quarantining sustainability in estates, disconnected from health economics, means carbon never enters the decisions that matter. Fix: put carbon values and life-cycle data into routine appraisal templates.
• Ignoring co-benefits and losing the strongest argument. Selling climate action only on distant global benefit forfeits the near-term local health case that usually wins budgets. Fix: quantify co-benefits in the decision's own outcome currency.
• Conflating mitigation and adaptation. Blending decarbonization and resilience in one business case hides where value comes from and weakens both. Fix: appraise them separately, then note where one measure does both.
• Greenwashing and undated ambition. Vague net-zero claims without a base year or assured reporting erode trust and collapse under scrutiny. Fix: set a dated trajectory on a consistent boundary and assure it like financial data.
• Equity blindness. Measures that cut carbon while widening health inequality — regressive levies, schemes only the affluent use — fail the system's core purpose. Fix: assess distributional effects and design co-benefits to reach greatest need.
• Planning for the old climate. Long-horizon estate and workforce plans built on a stationary climate under-provide for heat, flood, and disease shifts. Fix: stress-test long-lived plans against dated climate scenarios.

Maturity model

Checklist

• A whole-scope carbon footprint exists, with a stated base year and honest Scope 3 estimate.
• The two or three largest emission categories are identified and prioritized.
• Major appraisals price carbon using a published social-cost-of-carbon range.
• Near-term health co-benefits are quantified in the decision's own outcome currency.
• Procurement weights carbon and requests product-level supplier data.
• Low-value-care reduction is framed and tracked as carbon reduction.
• Mitigation and adaptation are appraised separately and both are funded.
• Long-horizon estate, workforce, and financial plans are stress-tested against dated climate scenarios.
• Distributional effects are assessed so measures do not widen health inequality.
• A dated emissions-reduction trajectory is reported on a consistent, assured boundary.
• Clinical hotspots (e.g. anaesthetic gases, inhalers, single-use devices) are run as measured projects.
• Carbon values and life-cycle data sit inside the finance and evaluation function, not only estates.

Key sources

• World Health Organization — climate change and health programme, and guidance on climate-resilient and low-carbon health systems.
• Health Care Without Harm — global reporting on the health sector's carbon footprint and decarbonisation pathways.
• National net-zero health commitments as exemplars — e.g. the NHS in England's "Greener NHS" / net-zero programme; national HTA and treasury carbon-valuation guidance (e.g. HM Treasury Green Book supplementary guidance on valuing greenhouse-gas emissions).
• Intergovernmental Panel on Climate Change (IPCC) assessment reports — climate projections and the health chapter, for scenario and impact framing.
• The Lancet Countdown on Health and Climate Change — recurring indicators tracking health impacts and co-benefits (date-stamp the specific report used).
• ISPOR and standard economic-evaluation methods guidance — for incorporating carbon and co-benefits into appraisal (see Chapter 2.1 — Economic Evaluation).

References

1. Planetary health — Wikipedia — https://en.wikipedia.org/wiki/Planetary_health
2. One Health — Wikipedia — https://en.wikipedia.org/wiki/One_Health
3. Carbon footprint — Wikipedia — https://en.wikipedia.org/wiki/Carbon_footprint
4. Greenhouse gas — Wikipedia — https://en.wikipedia.org/wiki/Greenhouse_gas
5. Life-cycle assessment — Wikipedia — https://en.wikipedia.org/wiki/Life-cycle_assessment
6. Externality — Wikipedia — https://en.wikipedia.org/wiki/Externality
7. Social cost of carbon — Wikipedia — https://en.wikipedia.org/wiki/Social_cost_of_carbon
8. Discounting — Wikipedia — https://en.wikipedia.org/wiki/Discounting
9. Co-benefits of climate change mitigation — Wikipedia — https://en.wikipedia.org/wiki/Co-benefits_of_climate_change_mitigation
10. Active travel — Wikipedia — https://en.wikipedia.org/wiki/Active_travel
11. Air pollution — Wikipedia — https://en.wikipedia.org/wiki/Air_pollution
12. Sustainable healthcare — Wikipedia — https://en.wikipedia.org/wiki/Sustainable_healthcare
13. Climate change mitigation — Wikipedia — https://en.wikipedia.org/wiki/Climate_change_mitigation
14. Net zero emissions — Wikipedia — https://en.wikipedia.org/wiki/Net_zero_emissions
15. Health impact assessment — Wikipedia — https://en.wikipedia.org/wiki/Health_impact_assessment
16. Effects of climate change on human health — Wikipedia — https://en.wikipedia.org/wiki/Effects_of_climate_change_on_human_health
17. World Health Organization — Climate change and health — https://www.who.int/health-topics/climate-change
18. Health Care Without Harm — Health care's climate footprint — https://noharm.org
19. HM Treasury — The Green Book (appraisal guidance, incl. valuing greenhouse-gas emissions) — https://www.gov.uk/government/publications/the-green-book-appraisal-and-evaluation-in-central-government
20. Intergovernmental Panel on Climate Change — Assessment Reports — https://www.ipcc.ch