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

Years of life lost due to air pollution deaths

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

Indoor air pollution and rural infant/child mortality

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,

Valuation of air pollution damages in CEE/NIS countries,

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 )

Present value of damage due to air pollution for 21st century

Long run damage due to air pollution per capita and relative to GNP

Cumulative costs of local and global damage by income

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