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Climate change is a major environmental threat of our time. Cities have a significant impact on greenhouse gas emissions as most of the traffic, industry, commerce and more than 50% of world population is situated in urban areas. Southern Europe is a region that faces financial turmoil, enhanced migratory fluxes and climate change pressure. The case study of Thessaloniki is presented, one of the only two cities in Greece with established climate change action plans. The effects of feasible traffic policies in year 2020 are assessed and their potential health impact is compared to a business as usual scenario. Two types of measures are investigated: operation of underground rail in the city centre and changes in fleet composition. Potential co-benefits from reduced greenhouse gas emissions on public health by the year 2020 are computed utilizing state-of-the-art concentration response functions for PMx, NO2 and C6H6. Results show significant environmental health and monetary co-benefits when the city metro is coupled with appropriate changes in the traffic composition. Monetary savings due to avoided mortality or leukaemia incidence corresponding to the reduction in PM10, PM2.5, NO2 and C6H6 exposure will be 56.6, 45, 37.7 and 1.0 million Euros respectively. Promotion of 'green' transportation in the city (i.e. the wide use of electric vehicles), will provide monetary savings from the reduction in PM10, PM2.5, NO2 and C6H6 exposure up to 60.4, 49.1, 41.2 and 1.08 million Euros. Overall, it was shown that the respective GHG emission reduction policies resulted in clear co-benefits in terms of air quality improvement, public health protection and monetary loss mitigation.