We analyse health benefits and socio-economic costs of CO2-abating options related to coal consumption in Shanxi. China. Emission reductions are estimated for SO2 and particles in addition to CO2. Co-benefits of each option are estimated in terms of how effectively it improves local air quality and thereby reduces health damage from pollution. The population-weighted exposure level for particles and SO2 is estimated using air quality monitoring data, and a simplified methodology is applied to estimate the reduced exposure to the population that may result from implementing the abatement measures. Exposure-response functions from Chinese and international epidemiological studies are Used to estimate the ensuing health effects. A method for estimating the impact of chronic PM10 exposure oil life expectancy in the affected population is developed and applied. An economic evaluation of the reduced health effect is made by determining unit prices of health impacts based partly oil damage costs and partly oil the willingness-to-pay approach. Our assessment of CO2-reducing abatement options in Shanxi demonstrates that these Measures entail large co-benefits and are highly profitable in a socio-economic sense. (C) 2003 Elsevier Ltd. All rights reserved.