Benefit transfer in valuing the costs of air pollution

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Benefit transfer in valuing the costs of air
pollution

• Gordon Hughes
• The World Bank NERA UK

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The issues

• How much does air pollution contribute to the
  total burden of disease ?
• Links between valuation-based approaches and
  those using a health metric (DALYs)
• Differences in impacts across countries or
  regions of the world
• Role of different types of air pollution indoor
  air pollution, urban air pollution, etc

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Benefit transfer DALYs vs dollars

• Global burden of disease approach
• includes discounting and age weighting
• widely applied to assessing health interventions
• Valuation for cost-benefit analysis across health
  / non-health concerns and policies
• Sensitivity to demographic characteristics of the
  exposed populations
• Are hazards proportional ?

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A DALY-based approach

• Wide range of YLLs lost per air pollution death
• with proportional hazard the range is from 6.6
  for developed countries to 21.1 in India
• with hazard after age 40 only, the range is from
  5.4 for developed countries to 8.3 for
  Russia/Ukraine
• In most cases the long run saving in YLLs is
  significantly lower because of the links between
  mortality rates and population age structure

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Years of life lost due to air pollution deaths
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Using DALYs for VOSL transfers

• VOSLs derived from wage differential studies
• an average loss of about 24 YLLs per death
• typical VOSLs are 6-8 times GNP per capita per
  YLL
• For air pollution deaths, range of VOSLs as
  multiple of GNP per capita
• proportional hazard 45 for the US, about 75 for
  China Russia/Ukraine,140 for India
• non-proportional hazard 37 for the US, 43 for
  China, 57 for India Russia/Ukraine

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Values of a statistical life based on DALY / YLL
calculations
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Indoor air pollution in India

• What is the role of environmental factors in the
  total burden of disease ?
• Studies show large impact of indoor air pollution
  on infant mortality morbidity
• Environmental factors account for 18-21 of total
  burden of disease
• indoor air pollution is largest component
• urban air pollution relatively small but growing

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Indoor air pollution and rural infant/child
mortality
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Improvements in the household environment and the
burden of disease
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Urban air pollution in China Asia

• Costs of urban air pollution projected from 1995
  to 2020 under various scenarios
• Already large in 1995, but would get much worse
  under a business as usual scenario
• Provided the basis for cost-benefit analyses of
  alternative environmental strategies
• Analysis had significant role in efforts to
  persuade countries to adopt low/medium cost
  control strategies

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Cost of urban air pollution in Asia(under a
business as usual scenario)
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The transition in CEE/NIS countries

• Did the transition in the CEE/NIS countries
  reduce environmental damage ?
• Yes, in Central Eastern Europe
• significant fall in exposure levels stable or
  declining mortality rates
• No, in Russia, Ukraine the NIS
• small fall in exposure levels offset by
  significant deterioration in general health
  conditions and mortality rates

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Premature mortality due to air pollution in
CEE/NIS countries, 1990-95
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Valuation of air pollution damages in CEE/NIS
countries, 1990-95
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Local, regional global air pollution

• Damage estimation benefit transfer methods used
  to assess the relative importance of different
  categories of air pollution
• Many technical questions but broad results are
  fairly robust
• Highlights large health burden due to indoor
  urban air pollution over next 2 decades
• Very different regional priorities in addressing
  air pollution concerns

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Premature mortality and burden of disease due to
air pollution(projected averages 2000-2020)
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Present value of damage due to air pollution for
21st century
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Long run damage due to air pollutionper capita
and relative to GNP
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Cumulative costs of local and global damage by
income
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Conclusions 1

• Simple methods of benefit transfer are not robust
• must adjust for the type of air pollution hazard
  and differences in age structures mortality
  rates
• impact of air pollution on infant/child mortality
  is especially important
• Use of DALYs or YLLs as measure of damage caused
  by air pollution may be sufficient for many types
  of policy analysis
• e.g. comparing the burden of disease associated
  with different environmental/social factors

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Conclusions 2

• Doubts about using VOSLs to value the costs of
  air pollution in developing countries
• the resulting estimates are extremely high
  relative to the income of those affected
• problems of adding-up and consistency are more
  severe for low income / high mortality countries
• But, benefit transfer methods can be useful for
  comparisons of the relative damages from
  different types of air pollution or other
  environmental factors