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Luis A. Cifuentes Pontificia Universidad Católica de Chile

Banco Interamericano de Desarrollo Diálogo Regional de Política III Reunión de la Red de Medio Ambiente Washington DC, 9-10 de marzo, 2004. Economic valuation applied to air quality and pollution management : Examples of experiences, political implications and application in a regional context.

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Luis A. Cifuentes Pontificia Universidad Católica de Chile

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  1. Banco Interamericano de DesarrolloDiálogo Regional de PolíticaIII Reunión de la Red de Medio Ambiente Washington DC, 9-10 de marzo, 2004 Economic valuation applied to air quality and pollution management : Examples of experiences, political implications and application in a regional context. Luis A. Cifuentes Pontificia Universidad Católica de Chile

  2. Changes in ambient concentrations Changes in theincidence of healtheffects Contingent Valuation Method Changes in pollutant emissions Changes inSocial Welfare Hedonic Prices Method Methods Neighborhood concentration $$$$ Home Prices

  3. Changesin ambient concentrations Changes in theincidence of health effects Changes inSocial Welfare Changes inpollutant emissions The Damage Function Method Atmospheric models C-R Functions Valuation models

  4. Cases analyzed • Metropolitan Zone of the México Valley, México • Metropolitan Region of Santiago, Chile • Sao Paulo, Brasil

  5. Zona Metropolitana del Valle de México, México Introduction • Objective: Economic valuation of the Third Program of Air Quality 2000-2010 (PROAIRE) • Focused on health benefits associated to reductions of PM10 and Ozone: 4 scenarios against a baseline 1995-99, but considers also social effects of environmental contingencies. • Time Horizon: 2000-2010, results shown for 2010 • Uses local and international studies to estimate the change in health effects (Many epidemiological studies have been conducted in México City). Uses one US Study to estimate the long-term exposure effects on premature mortality • Uses unit values derived in the US and transfered to México, and Human Capital to value mortality reductions • Performed by the Environmental Studies Institute (IVM, The Netherlands) and THe National Center for Environmental Health (CENSA) supported by many other institutions.

  6. Changes in the Exposure to Pollutants Ozono: PM10:

  7. Premature Mortality Reductions in the México Valle Zone in 2010 Note: only two of the four scenarios analyzed are shown. The 20% and AQS1 scenarios are not shown Fuente: Cesar et al. (2000), Cuadro 5.4, Pág. 31.

  8. Morbidity Reductions in the México Valle Zone in 2010 Nota: se muestran solo 2 de los 4 escenarios calculados originalmente. Los escenarios 20% y AQS1 se han eliminado Fuente: [Cesar, Dorland et al. 2000] Cuadros 5.2 y 5.3, Pág. 30.

  9. Benefits due to the reduction of PM10 and Ozone in 2010(Millions of US$) Nota: se muestran solo 2 de los 4 escenarios calculados originalmente. Los escenarios 20% y AQS1 se han eliminado Fuente: Cesar et al. Tabla 6.9, pag. 44

  10. México: conclusions • For the 10% reduction scenario, the benefits of PM10 are higher than the ozone benefits, but are similar for the AQS2 scenario • The biggest share of the benefits comes from the WTP of the individuals: around 50% for ozone, and up to 90% for PM10 benefits • The use of an income transfer elasticity of 0.4 instead of 1.0 increases the benefits in almost 50%. • The health benefits are much higher (about 25 times) than those of the environmental contingencies.

  11. Sao Paulo, Brasil: Introduction • Objective: ex-post evaluation of the health benefits associated to the 3rd phase of the Mobile Sources Air Pollution Control Program (PROCONVE) • Performed by the brazilean team of the Integrated Environmental Strategies (IES) : Sao Paulo University School of Medicine, and IPEA of Río de Janeiro • Considers NO2, PM10, SO2 y CO • Computed the health benefits of the reduction of ambient pollutants in years 1996 to 2000, with respect to the baseline 1991-93 • The study differs from the others in that it used data from half of the study period to estimate the impacts on health, and then applies them to the rest of the period.

  12. Ambient Concentrations of NO2

  13. Health Effects avoided in São Paulo , 1997-2000 Fuente: [Braga, Pereira et al. 2002] Tabla 6.

  14. Health Benefits, 1997-2000(thousand of US$) Fuente: [Ortiz and Serôa da Motta 2002] Tabla 6

  15. Santiago de Chile: Introduction • Objective: to quantify the social benefits of the air pollution reductions resulting from the Prevention and Decontamination Plan of the Santiago Metropolitan Region (PPDA), in the period 1997-2011 • Focused on health benefits associated to reductions from fine particles (PM2.5) and O3 • Local (3) and international studies used to estimate the changes in health effects. One US study used to estimate the long-term exposure effects on premature mortality, used as a high-case • Social values transferred from the US, except to a local WTP to reduce mortality risks and local costs of hospital admissions. • Performed by P. Universidad Católica de Chile for CONAMA R.M.

  16. The 1997 Santiago Decontamination Plan (updated 2001) • In 1997 a Atmospheric Decontamination and Prevention Plan (PPDA) was signed into law. • The Plan The Plan calls for a gradual reductions in pollutant concentrations, aiming to comply with the current Chilean PM10 and ozone standards in a 15 year time frame. • The baseline conditions assume an increase in concentrations due to increase in population and in economic conditions

  17. Change in Effects due to a reduction of 1 ug/m3 of PM2.5 Computed for Santiago, for the year 2000

  18. Total effects avoided by Santiago Decontamination Plan, 1997-2011 • Total effects added over 15 year period

  19. Total benefits due to the Plan 1997-2011 Millones de dólares del 2000

  20. COI+WTP Only COI What is the source of the benefits ? • When WTP values are considered, premature mortality dominates the benefits (even without considering long-term exposure mortality effects) • When only Cost of Illness and Lost Productivity are considered, Chronic Bronchitis, Premature Mortality and Work Loss Days dominate.

  21. Who gets the benefits of abatement? • Benefits were assigned to different sectors of society according to who gets them, using occupational status data, health system data, and pension fund data. • Medical costs are only 2% of the total, while Lost Productivity is 21% • The highest fraction (77%) comes from willingness to pay of the population

  22. Average Benefit of Emissions Reduction(1997 US$ per ton) • Benefits of primary pollutants emissions reductions were computed using a simplified source-apportionment model (assuming toxicity of each component is the same) • These can be used to directly value changes in emissions pollutants resulting from control measures

  23. Control Measures by Benefit/Cost Ratio • Computed for the high-value scenario, no CO2 reducctions considered

  24. Aplicability in the Region: Can be this type of analysis be applied in other countries of Latin-American and the Caribean? Yes, as long as there are enough data: • Ambient concentrations monitoring • Good demography and health data: mortality and morbidity • Medical treatment costs • Willingness to Pay to avoind health effects studies • Emissions inventories (only to value emission reductions)

  25. Possible approximations

  26. Conclusions • The quantification of the benefits of a air pollution improvement program leads towards better decision making: it helps to decide if it is socially advisable to invest resources in improving the quality of the air • The quantitative measurement of benefits helps the environmental vice-ministers, since: • they be contrasted with the costs of the programs (Cost Benefit) • They can be contrasted with the benefits of other programs (Cost Effectiveness) • Allows to better communicate the benefits associated to the improvement of the quality of the air: the population may understand them better • A detailed analysis of individual control measures, allows to hierarchize them, and to take the most cost-effective course of action (it is not enough to know the emissions reductions ) • The early application of these techniques may allow developing countries to anticipate the solution of pollution problems: the analyses show that it is not necessary to wait for a greater per capita income to act. • It facilitates the obtention of concursable funds from international financing institutions.

  27. Conclusions – Cases of Study With respect to the results: • The economic valuation assumptions are the most important, still more than the health effects studies; since there is much more discretion in choosing methods and parameters • Often, transference of values and/or health impact functions must be used, giving rise to transference errors. • In the study cases, benefits of improving air quality are quite significant, confirming the assumption of the existence of important benefits associated to the improvement of air quality • Moreover, these results suggest the importance of improving the quality of the air now, not delaying these actions to the future

  28. Conclusions – Cases of Study With respect to the capacities It is worth noting the availability of local capacities to perform this type of studies. However, there is still much left to do: • First, it is necessary to better understandand the local processes of air pollution • Second, is necessary to understand the air pollution effects in each urban area • Third, is necessary to make more field work to understand how the population really perceives and values the problem of the quality of the air and its impact on quality of life. • Finally, it is necessary that the economic foundations of valuation of air quality are incorporated by the environmental agencies as part of their task of management of the quality of the air

  29. Colaborators • Luis I. Rizzi • Héctor Jorquera • Javier Vergara

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