Chris Dockins

Risk assessment for benefits analysis: framework for analysis of a thyroid-disrupting chemical.

Benefit-cost analysis is of growing importance in developing policies to reduce exposures to environmental contaminants. To quantify health benefits of reduced exposures, economists generally rely on dose-response relationships estimated by risk assessors. Further, to be useful for benefits analysis, the endpoints that are quantified must be expressed as changes in incidence of illnesses or symptoms that are readily understood by and perceptible to the layperson. For most noncancer health effects and for nonlinear carcinogens, risk assessments generally do not provide the dose-response functions necessary for economic benefits analysis. This article presents the framework for a case study that addresses these issues through a combination of toxicology, epidemiology, statistics, and economics. The case study assesses a chemical that disrupts proper functioning of the thyroid gland, and considers the benefits of reducing exposures in terms of both noncancer health effects (hypothyroidism) and thyroid cancers. The effects are presumed to be due to a mode of action involving interference with thyroid–pituitary functioning that would lead to nonlinear dose response. The framework integrates data from animal testing, statistical modeling, human data from the medical and epidemiological literature, and economic methodologies and valuation studies. This interdisciplinary collaboration differs from the more typical approach in which risk assessments and economic analyses are prepared independently of one another. This framework illustrates particular approaches that may be useful for expanded quantification of adverse health effects, and demonstrates the potential of such interdisciplinary approaches. Detailed implementation of the case study framework will be presented in future publications.

Linking Economics and Risk Assessment

Benefit-cost analysis relies heavily upon risk assessment. The extent to which benefits can be quantitatively included in an economic analysis is frequently determined by risk assessment methods. Therefore, interdisciplinary collaboration between economists and experts in risk assessment-related disciplines is critical to further development of quantitative human health benefits analysis. To further lay the groundwork for such collaborations, this article reviews the economic foundations of benefit-cost analysis, identifies implications of incorporating this approach into risk assessment, and suggests future cooperation between economists and risk assessors.

What to Do at Low Doses: A Bounding Approach for Economic Analysis

To quantify the health benefits of environmental policies, economists generally require estimates of the reduced probability of illness or death. For policies that reduce exposure to carcinogenic substances, these estimates traditionally have been obtained through the linear extrapolation of experimental dose-response data to low-exposure scenarios as described in the U.S. Environmental Protection Agencys Guidelines for Carcinogen Risk Assessment (1986). In response to evolving scientific knowledge, EPA proposed revisions to the guidelines in 1996. Under the proposed revisions, dose-response relationships would not be estimated for carcinogens thought to exhibit nonlinear modes of action. Such a change in cancer-risk assessment methods and outputs will likely have serious consequences for how benefit-cost analyses of policies aimed at reducing cancer risks are conducted. Any tendency for reduced quantification of effects in environmental risk assessments, such as those contemplated in the revisions to EPAs cancer-risk assessment guidelines, impedes the ability of economic analysts to respond to increasing calls for benefit-cost analysis. This article examines the implications for benefit-cost analysis of carcinogenic exposures of the proposed changes to the 1986 Guidelines and proposes an approach for bounding dose-response relationships when no biologically based models are available. In spite of the more limited quantitative information provided in a carcinogen risk assessment under the proposed revisions to the guidelines, we argue that reasonable bounds on dose-response relationships can be estimated for low-level exposures to nonlinear carcinogens. This approach yields estimates of reduced illness for use in a benefit-cost analysis while incorporating evidence of nonlinearities in the dose-response relationship. As an illustration, the bounding approach is applied to the case of chloroform exposure.

Estimating the health benefits of environmental regulations

Changes needed for complete benefits assessment Assessing health benefits of policies addressing environmental contaminants is important for decision-making and for informing the public about how policy affects their welfare (1). Benefits analysis, one side of benefit-cost analysis (BCA), can be relatively straightforward when sufficient data are available on dose-response relationships, changes in exposure expected from a proposed policy, and other key inputs. But despite progress, benefits analysis for health effects is needlessly constrained by analytic practices that are scientifically outdated and inconsistent with economic theory. These limitations can result in exclusion of important health effects from the estimated benefits of reducing exposure to toxic environmental contaminants, which, in turn, affects net benefits calculations that inform public policy. Fortunately, economic theory and scientific advances in the risk assessment literature provide a way forward.

Meeting report: Estimating the benefits of reducing hazardous air pollutants--summary of 2009 workshop and future considerations.

Background Quantifying the benefits of reducing hazardous air pollutants (HAPs, or air toxics) has been limited by gaps in toxicological data, uncertainties in extrapolating results from high-dose animal experiments to estimate human effects at lower doses, limited ambient and personal exposure monitoring data, and insufficient economic research to support valuation of the health impacts often associated with exposure to individual air toxics. Objectives To address some of these issues, the U.S. Environmental Protection Agency held the Workshop on Estimating the Benefits of Reducing Hazardous Air Pollutants (HAPs) in Washington, DC, from 30 April to 1 May 2009. Discussion Experts from multiple disciplines discussed how best to move forward on air toxics benefits assessment, with a focus on developing near-term capability to conduct quantitative benefits assessment. Proposed methodologies involved analysis of data-rich pollutants and application of this analysis to other pollutants, using dose–response modeling of animal data for estimating benefits to humans, determining dose-equivalence relationships for different chemicals with similar health effects, and analysis similar to that used for criteria pollutants. Limitations and uncertainties in economic valuation of benefits assessment for HAPS were discussed as well. Conclusions These discussions highlighted the complexities in estimating the benefits of reducing air toxics, and participants agreed that alternative methods for benefits assessment of HAPs are needed. Recommendations included clearly defining the key priorities of the Clean Air Act air toxics program to identify the most effective approaches for HAPs benefits analysis, focusing on susceptible and vulnerable populations, and improving dose–response estimation for quantification of benefits.

Valuing Ecological Improvements in the Chesapeake Bay and the Importance of Ancillary Benefits

Reducing the excess nutrient and sediment pollution that is damaging habitat and diminishing recreational experiences in coastal estuaries requires actions by people and communities that are within the boundaries of the watershed but may be far from the resource itself, thus complicating efforts to understand tradeoffs associated with pollution control measures. Such is the case with the Chesapeake Bay, one of the most iconic water resources in the United States. All seven states containing part of the Chesapeake Bay Watershed were required under the Clean Water Act to submit detailed plans to achieve nutrient and sediment pollution reductions. The implementation plans provide information on the location and type of management practices making it possible to project not only water quality improvements in the Chesapeake Bay but also improvements in freshwater lakes throughout the watershed, which provide important ancillary benefits to people bearing the cost of reducing pollution to the Bay but unlikely to benefit directly. This paper reports the results of a benefits study that links the forecasted water quality improvements to ecological endpoints and administers a stated preference survey to estimate use and nonuse value for aesthetic and ecological improvements in the Chesapeake Bay and watershed lakes. Our results show that ancillary benefits and nonuse values account for a substantial proportion of total willingness to pay and would have a significant impact on the net benefits of pollution reduction programs.

Defining the baseline

Evaluating the benefits and costs of any action is fundamentally determined by the baseline, which determines the basis of comparison for the action. However, the topic of a baseline is often given limited attention in benefit-cost analysis (BCA) textbooks and journal articles, despite the fact that this is one of the first issues economists confront when doing applied analysis. This paper addresses the gap by discussing some of the nuances of defining and constructing a defensible baseline and illustrates these nuances with examples from the US Environmental Protection Agency (EPA). Core materials for BCA teachers include the narrative as well as links to documents, websites and regulatory impact analyses illustrating these baseline nuances.