CAFE CBA – Draft Baseline Results Paul Watkiss and Steve Pye, AEA Technology Environment Mike Holland, EMRC Fintan Hurley, IOM Alistair Hunt, Metroeconomica

Update on Progress Draft final methodology completed early July 2004 2nd Stakeholder consultation workshop mid July 2004 Peer review August – September 2004 Alan Krupnick, Bart Ostro, Keith Bull First application (draft) to baseline November 2004 Final methodology report end November 2004 Application to MTFR and scenario December onwards

Peer Review Widespread acceptance of the methodology ‘Fit for purpose’… ‘reasonable basis for generating information to policy makers and the public about expected health / environmental benefits from improved air quality’ ‘Only one part of informational package used… in policy assessment ‘ Uncertainty assessment on both the benefit and cost sides is noteworthy Some specific points raised Some specific issues on health, including WHO guidance Chronic mortality - both life years lost and cases of premature mortality Value of (statistical) life year lost (VOLY), value of a statistical life (VSL)

Benefits Framework – CAFE CBA Model Based around GIS Bring together – stock at risk, functions, values. Take pollution concentration output from RAINS directly Transparent framework – easy to update Extended sensitivity analysis Complemented by extended-CBA (qualitative) for some categories

Health Benefits Considered Aim to undertake a HIA Deaths brought forward from ozone Chronic mortality from fine particulates (PM2.5) primary and secondary Respiratory hospital admissions (ozone) and (PM10) Restricted activity days (PM2.5) minor RAD (PM2.5, ozone) Infant and childhood mortality (PM2.5) Chronic bronchitis (PM2.5 chronic morbidity) Respiratory symptoms in adults and in children (PM10) Some additional impacts to finalise + sensitivity RAINS + CBA CBA

PM Baseline Impacts – Respiratory Hospital Admissions (RHA) 2000 2010 2020

PM Baseline Impacts - RHA PM and Respiratory Hospital Admission by EU country in 2000, 2010, 2020 EU25 49000/year in 2000 falling to 31000/year in 2020

Baseline Infant Mortality Rates 2000 2010 2020

PM Baseline Impacts – Infant Mortality 2000 2010 2020

PM Baseline Impacts – Infant Mortality PM and Infant (1-12 months) mortality by EU country in 2000, 2010, 2020 EU25 530/year in 2000 falling to 260/year in 2020

PM Baseline Impacts – EU 25 In addition to change in loss of average life expectancy from ~12 months to ~5 months (chronic mortality) from RAINS Significant reductions over baseline period, but remain serious numbers of impacts in 2020

Ozone Baseline Impacts – RHA 2000 2010 2020

Ozone (SOMO35) Baseline – minor RAD ozone and minor restricted activity day by EU country in 2000, 2010, 2020 56 million to 39 million EU25

Ozone Baseline Impacts – EU25 Numbers of impacts are lower than PM Less reductions over baseline than seen for PM

Non-Core Endpoints Also calculating Acute mortality PM2.5, PM10, PM2.5-10 Sensitivity of ozone effects with no cut point Number of other effects, including US literature from peer review

Valuation Total economic cost from air pollution in 2000, 2010, 2020 For acute morbidity, annual rates directly assessed from impacts, WTP For chronic effects (mortality) Life expectancy from ~12 months to ~5 months from RAINS. = Move to a new sustained pollution level – total benefits over future years Not an annual effect, need to assess effects for 1 year. Need to annualise. Based on peer review, assess life YOLL AND deaths. Monetise using value for year of life lost (VOLY), and value for statistical life (VSL)

Note: Results are still subject to internal review! Preliminary EU25 estimates of the health impact of CAFE baseline (mean estimates based on VOLY) Note: Results are still subject to internal review!

Note: Results are still subject to internal review! Preliminary EU25 estimates of the health impact of CAFE baseline (median estimates based on VOLY) Note: Results are still subject to internal review!

Man-Made and Natural Environment Damage to buildings – corrosion and soiling Crops Ecosystems Cultural Heritage Other (visibility) Social (employment, deprivation/inequality) Ancillary (greenhouse gas emissions) Economic (employment/growth) Quantified and monetised impact pathway Extended CBA Outside core analysis

Stock at Risk – e.g. Wheat

Next Steps Valuation of materials Some minor amendments from ICP materials (April next year) Crops – flux based approach based on Defra work Finalised March next year Interim position – quantify using existing data and approaches

Initial comparison of costs and benefits Are model estimate benefits > model estimate costs? What is the ratio of costs to benefits? Is this likely to change much when uncertainties are accounted for?

Extended CBA Previously called ‘MCA’, ‘modified MCA’ Purpose Raise profile and understanding of unquantified impacts Are these effects so important that they would change views on the balance of costs and benefits? Improve understanding of the impacts that we do quantify

Presentation of the results Quantification of costs (RAINS) Quantification of impacts (RAINS/CAFECBA) Monetisation of impacts where possible Initial comparison of costs and benefits Extended CBA Uncertainty analysis for benefits Bias analysis, statistical analysis, sensitivity analysis Further comparison of costs and benefits Uncertainties GEM-E3 outputs, competitiveness, employment

Quantified and valued impacts Region EU25 EU15 New Member States UNECE Individual countries Economic basis By scenario Marginal

Presenting results Costs €€€€€ Benefits Health €€€€€ see ref… etc. €€… Sub-total benefits Ecosystem effects Physical impact Summary RAINS results Economic effect    see ref… Cultural heritage   see ref… Crops – visible injury  see ref… Effects of ozone on paint Negligible    Considered likely to have a significant effect at the European scale   May have a significant effect at the European scale  May have a significant effect locally, but not Europe-wide Negligible Unlikely to be important at national or local scales

Conclusions Methodology peer review and agreed Model working (CAFE CBA model) Linked to RAINS output – demonstrated models work together Draft analysis of baselines complete Initial conclusions - move from mortality to morbidity will be significant in terms of the ‘evidence for health and air pollution’ – numbers of cases Monetary valuation shows high values – biggest single effect is PM chronic mortality, but others important. PM>>>ozone (but non-health ozone) Extended CBA for non-monetised effects. Sensitivity/uncertainty analysis Next….. MTFR and scenarios