1. Evaluation of the Costs and Benefits of Household Energy and Health Interventions 31 st IAEE International Conference, Pre-Conference Workshop on Clean Cooking Fuels Istanbul, 16-17 June 2008 Guy Hutton 1, Eva Rehfuess 2 and Fabrizio Tediosi 3 1 World Bank, Phnom Penh, 2 World Health Organization, Geneva, 3 Università Bocconi, Milan

2. Economic evaluation: demonstrates the economic return of investments in an intervention compares the cost-effectiveness/ costs and benefits of one intervention against another helps policy-makers allocate their limited budget Caveat: Economic pay-off is not the only criterion for identifying sound interventions. Why economic evaluation?

3. Cost-benefit versus cost-effectiveness analysis Courtesy of Nigel Bruce/Practical Action Cost-benefit analysis Do all the benefits outweigh all the costs of an intervention? perspective: society, multiple sectors unit: benefit-cost ratio in $ Courtesy of Dominic Sansoni/World Bank Cost-effectiveness analysis How can one maximize health for available resources? perspective: health sector unit: cost-effectiveness ratio, e.g. in $ per healthy life year gained

4. Comparison measure Economic costs: annual average economic benefit of intervention annual average economic cost of intervention Benefit-cost ratio (BCR) fuel costs, stove costs programme costs (including R&D investment, education) reduced healthcare costs health-related productivity gains time savings environmental impacts Economic benefits: =

5. Interventions and scenarios modelled Basic approach: –analysis for 11 developing and middle-income WHO subregions –separate analysis for urban and rural areas –baseline year 2005; ten-year intervention period (2006-2015) –3% discount rate applied to all costs and benefits Baseline: current mix of dung, wood, coal, cleaner fuels, etc. Intervention 1: (50%, 100% coverage, pro-poor) switch to LPG (ethanol) Intervention 2: (50%, 100% coverage) cleaner-burning, fuel-efficient “rocket-type” stove

6. Important benefit assumptions: health impacts and productivity gains Conclusive evidence for health impact of indoor air pollution: –acute lower respiratory infections (ALRI): children under five –chronic obstructive pulmonary disease (COPD): adults above 30 –lung cancer (coal use): adults above 30 Avoided health impacts: –ALRI, COPD, lung cancer (WHO methodology for burden of disease) –LPG/ethanol: risk reduction to baseline risk –stoves: 35% risk reduction (personal exposure reduction, lag times) Health-related productivity gains: –number of illness-free days and deaths avoided, for type of illness and level of severity –valued using human capital approach: daily Gross National Income (GNI) per capita and income-earning life from 15 to 65 years

7. Important benefit assumptions: time savings and environmental benefits Time savings: –due to reduced fuel collection (survey data in selected locations) –due to time saved on cooking (laboratory data) –valued at GNI per capita Local environmental benefits: –avoided deforestation –valued using tree replacement cost (labour + sapling + wastage) Global environmental benefits: –averted CO 2 + CH 4 emissions (published studies) –valued using carbon trading values (Clean Development Mechanism)

8. Proposed voluntary MDG target: halve, by 2015, the population cooking with solid fuels, and make improved cookstoves widely available World Health Organization, Fuel for life: household energy and health. WHO, 2006.

9. Results (US$ per year): Providing access to LPG, by 2015, to half of those burning solid fuels in 2005 Programme cost: 130 million Total cost: 13 billion Total benefit: 91 billion Benefit-cost ratio: 7:1 Benefit-cost ratio*: 4:1 Sensitivity analysis: 2:1 – 29:1 Courtesy of Nigel Bruce/ Practical Action * Intervention cost savings included with economic benefits.

10. Results (US$ per year): Making improved stoves available, by 2015, to half of those burning solid fuels in 2005 Courtesy of GTZ Programme cost:650 million Total cost: -34 billion (2 billion costs, - 36 billion fuel savings) Total benefit: 105 billion Benefit-cost ratio: negative Benefit-cost ratio*: 61:1 Sensitivity analysis: negative * Intervention cost savings included with economic benefits.

11. Distribution of economic benefits LPGImproved stoves Health-related productivity gains and time savings due to less fuel collection and cooking constitute the greatest benefits.

12. Key limitations Considerable variation between world regions, as well as between urban and rural settings. Findings based on global/regional data and assumptions do not necessarily apply to specific countries or programmes. Idealistic, target-based scenarios versus realistic, programme-based analyses. Need to refine optimistic assumptions (e.g. effectiveness of stove, programme costs, unsustainable harvesting of firewood) and pessimistic assumptions (e.g. greenhouse gases included, value of avoided emissions).

13. Conclusions Globally, both a switch to cleaner fuels and the promotion of fuel-efficient, cleaner-burning stoves appear to be highly cost-effective. Making the economic case remains a challenge: –Household energy and health is an inter-sectoral issue with no clear policy lead across countries. –Programme level versus household level: Where do costs occur? Where do benefits occur? There is a need for the application and refinement of current cost-benefit analysis methodology at national and programme levels.

14. Courtesy of Crispin Hughes/Practical Action For more information: http://www.who.int/indoorair Dr Eva Rehfuess Public Health and Environment World Health Organization 1211 Geneva 27 Switzerland Email: rehfuesse@who.intrehfuesse@who.int

15. An expression of the link between solid fuel use and its impact on health, socio- economic development and the environment, targetted at an issue of specific policy or management concern, and represented in a form that facilitates interpretation for effective decision-making. What are indicators on solid fuel use? An attempted definition Adapted from: Making a difference: indicators to improve children's environmental health. WHO, 2003.

16. POVERTY Traditional household energy Environmental impacts - Pressure on forests - Greenhouse gas emissions Impacts on time -Fuel collection -Cooking -Care of sick children -Inability to generate income due to illness or death Health impacts -Indoor air pollution: ALRI, COPD, lung cancer, etc. -Burns during use -Assault and injury during fuel collection Expenditure impacts -Fuel and stove costs -Healthcare costs Multiple impacts of traditional household energy use Impact on women -Decision-making -Status

17. Considerable variation in benefit-cost ratios ( intervention cost savings included with economic benefits) LPGImproved stoves UrbanRuralUrbanRural Maximum BCR in different regions 8.86.7110.7164.1 Minimum BCR in different regions 1.81.532.128.3