Transcript Benefit transfer in valuing the costs of air pollution Gordon Hughes The World Bank & NERA UK.

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
Survival table
Western
Prop for
all ages
Type of hazard
Prop for
> 40 yrs
China
Prop for
all ages
India
Prop for
> 40 yrs
Prop for
all ages
Russia/Ukraine
Prop for
> 40 yrs
Prop for
all ages
Prop for
> 40 yrs
A. Impact effect of 50 ug/m3 reduction in air pollution (for population of 1 million)
No of
avoided
premature
deaths
No of YLLs avoided
No of YLLs per premature
death avoided
440.7
421.3
272.6
221.4
319.3
155.1
523.9
468.9
2,900.3
2,287.0
3,058.5
1,383.4
6,725.2
1,279.2
5,641.0
3,884.7
6.6
5.4
11.2
6.2
21.1
8.2
10.8
8.3
B. Long run effect of 50 ug/m3 reduction in air pollution (for population of 1 million)
No of YLLs avoided
No of YLLs per premature
death avoided
2,184.8
1,594.5
2,755.4
1,054.1
6,871.2
1,082.3
4,197.9
2,533.8
5.0
3.8
10.1
4.8
21.5
7.0
8.0
5.4
C. Baseline data
Crude mortality rate
10.8
6.7
7.8
12.9
Estimated no of YLLs per
work accident
24.3
24.9
25.4
24.5
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
Baseline data
GNP per capita ($ 1995)
VOSL based on work risks ($ 1995)
YLLs for work risks
VOSL per YLL
Multiple of GNP per capita per YLL
USA
27,350
4,500,000
24.3
185,200
6.8
China
620
India
350
Russia
2,290
VOSL estimates for proportional hazard with odds ratio of 1.0085
YLLs lost per premature death
6.6
11.2
Implied YLL-based VOSL
1,220,000
47,000
21.1
50,000
10.8
167,000
VOSL estimates for proportional hazard with odds ratio of 1.0200
YLLs lost per premature death
6.8
11.5
Implied YLL-based VOSL
1,260,000
48,000
21.4
51,000
11.1
172,000
VOSL estimates for non-proportional hazard with odds ratio of 1.0085
YLLs lost per premature death
5.4
6.2
Implied YLL-based VOSL
1,010,000
26,000
8.2
20,000
8.3
128,000
VOSL estimates for non-proportional hazard with odds ratio of 1.0200
YLLs lost per premature death
5.6
6.4
Implied YLL-based VOSL
1,030,000
27,000
8.4
20,000
8.5
132,000
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
P robability
of
survival
1.00
0.98
0.96
0.94
0.92
0.90
0.88
0
5
10
15
20
25
A ge in m
onth
Ac
C
tu
l e
a
a
lAl
n lch
oo
ou
ks
i n
eg
ho
Improvements in the household
environment and the burden of disease
Scenario
Total number of deaths (000s)
All India
Urban
Rural
A. Infant deaths ( < 12 months old)
Model baseline estimates
1. All households use a clean cooking fuel
2. All households with private water & sanitation
3. All households with clean cooking fuel + private
water & sanitation
1,605
1,184
1,200
910
181
174
160
154
1,424
1,011
1,040
757
B. Deaths of children < 5 years old
Model baseline estimates
1. All households use a clean cooking fuel
2. All households with private water & sanitation
3. All households with clean cooking fuel + private
water & sanitation
2,051
1,442
1,515
1,094
223
213
196
187
1,827
1,230
1,319
907
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)
50
Cost of air pollution as % of urban GDP
40

30

20 
10 











0
1995
2000
2005
Y ear




2010




China cities
 Jakarta
Manila
 Bangkok

 Seoul


2015
2020
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, 1990-95
E
x c es s
d e a th s
per
y
5 0
4 0
3 0
1990
1995
2 0
1 0
0
C E
E
C
/N
EIS
E
N IS
So u rc e
:
W o rl d
Ba n k
Valuation of air pollution damages
in CEE/NIS countries, 1990-95
To ta l
c os t
in
$
bi l l i on
7
6
5
4
1 9 9
1 9 9
3
2
1
0
C E
E
C
/N
EIS
E
N IS
So u rc e
:
W o rl d
Ba n k
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 2000-2020)
Region
Premature deaths
(‘000s p.a.)
Direct
Local
Total
Burden of disease
(million DALYs p.a.)
Direct
Local
Total
China
East Asia and Pacific
Established Market Economies
Former Socialist Economies
India
Latin America & Caribbean
Middle East Crescent
South Asia
Sub-Saharan Africa
150
100
0
10
490
10
70
220
530
590
150
20
200
460
130
90
120
60
740
250
20
210
950
140
160
340
590
4.5
3.5
0
0.2
17.0
0.3
2.4
7.6
18.1
14.0
3.8
0.5
3.8
10.1
3.7
2.5
2.6
1.2
18.5
7.3
0.5
4.0
27.1
4.0
4.9
10.2
19.3
World
1570
1810
3480
53.4
42.2
95.6
Present value of damage due to air
pollution for 21st century
Region
China
East Asia and Pacific
Established Market Economies (EME)
Former Socialist Economies
India
Latin America & Caribbean
Middle East Crescent
South Asia
Sub-Saharan Africa
World excl EME countries
World
Present value of damage due to air pollution
in $ billion at 1995 prices
Direct
Local
Regional
Global
Total
245
200
0
0
481
39
100
247
389
1,328
512
1,031
641
605
1,074
483
164
71
121
62
1,361
73
23
56
43
3
21
22
286
1,151
27
252
357
168
50
184
1,715
1,061
3,543
742
1,360
1,527
794
464
665
1,701
1,701
4,878
5,909
402
1,763
1,346
2,497
8,327
11,870
Long run damage due to air pollution
per capita and relative to GNP
Region
Present value of damage due to air pollution
Per person in $ 1995
as % of 1995 GNP
Direct+Local
Global
Direct+Local
Global
China
East Asia and Pacific
Established Market Economies
Former Socialist Economies
India
Latin America & Caribbean
Middle East Crescent
South Asia
Sub-Saharan Africa
1,307
1,291
1,199
1,552
1,168
2,347
1,641
1,457
794
18
519
1,338
65
271
754
474
176
317
211
71
5
78
365
70
77
352
162
3
29
5
3
85
22
22
42
65
World
1,347
442
27
9
Cumulative costs of local and
global damage by income
P resent
value
Ra
s o
tio
f da
o
m
f
8
20
6
15
4
10
2
5
0
100
1000
GNP
0
10000100
per person
Cu m u
C
l a
ut
m
i vu
e
R
l a
l
a
o
tt
ic
i
v
o
a
el
o
g
d
f la
c
om
u
b
c u m u l a ti v
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