1. ECONOMIC IMPACT OF AIR POLLUTION ON HUMAN HEALTH
Shreekant Gupta
National Institute of Urban Affairs, New Delhi
and
Delhi School of Economics, University of Delhi
NATIONAL WORKSHOP ON URBAN AIR QUALITY & INTEGRATED TRAFFIC MANAGEMENT, Karachi
September 13, 2006

2. Overview The context Physical impact-quantification
Valuation of physical impact-methodologies
Empirical evidence
Next steps

3. The context (macro view)
Growing economies and populations of South Asia and the environmental impact
Urbanisation and its attendant challenges
5 of 10 world’s biggest cities in South Asia by 2015
Increasing dependence on personalised (motorised) modes of transport
Commonality of urban problems across major South Asian cities
Focus on air quality (esp. particulates, but others as well—NOx, SO2 )

4. Steps in quantification of physical impacts
(Dose)
Identify pollutant and measure ambient concentrations
Calculate exposure
(Response)
Calculate health impacts based on epidemiological research
Once health impacts quantified the monetary value of this damage can be estimated

5. Quantification of physical impacts
Measurement issues (particulates, fine particulates)
Extrapolation issues (can we simply extrapolate from ‘other’ dose-response studies?
Mortality/morbidity data issues
Long way to go…

7. Valuation of health impacts (mortality/morbidity)
Health costs of ‘dirty’ air / benefits of ‘clean’ air
Value of statistical life (VSL) – what / why?
Willingness-to-pay (WTP) estimates (mostly western data – range US$3.6 million – US$4.8 million
Human capital approach – lower bound to WTP

8. obtainable (does value (Hicksian) Demand Curves
Methods for the Monetary Evaluation of the Environment
Monetary Evaluation Methods
Demand Curve
Approaches
Non-Demand Curve
Approaches
Expressed
Preference Methods
Revealed Preference
Methods
Dose-Response
Methods
Replacement
Costs
Mitigation
Behaviour
Contingent Valuation
Method
Travel Cost
Method
Hedonic
Pricing Method
Demand Curves not
obtainable (does value
estimates only)
Income Compensated
(Hicksian) Demand Curves
Uncompensated
(Marshallian)
Demand Curve
No true welfare
measures
Compensating
Variation
Welfare
Measure
Equivalent
Variation
welfare
measure
Consumer
Surplus welfare
measure

9. Empirical evidence
Dose response extrapolations may overestimate health impacts (Cropper et al. 1997)
VSL extrapolations may underestimate monetary values
Net effect unclear

11. Next steps Importance of better research and analysis
Move away from comfort zone of guess-estimates
Guide more cost-effective policy interventions