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Benefit transfer in valuing the costs of air pollution. Gordon Hughes The World Bank & NERA UK. 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)
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Benefit transfer in valuing the costs of air pollution Gordon Hughes The World Bank & NERA UK
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
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 ?
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
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
Values of a statistical life based on DALY / YLL calculations
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
Improvements in the household environment and the burden of disease
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
Cost of urban air pollution in Asia(under a business as usual scenario)
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
Premature mortality due to air pollution in CEE/NIS countries, 1990-95
Valuation of air pollution damages in CEE/NIS countries, 1990-95
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
Premature mortality and burden of disease due to air pollution(projected averages 2000-2020)
Present value of damage due to air pollution for 21st century
Long run damage due to air pollutionper capita and relative to GNP
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
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