Nathalie B. Simon

Age, Health and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents

A contingent valuation survey was conducted in Shizuoka, Japan, to estimate the willingness to pay (WTP) for reductions in the risk of dying and calculate the value of statistical life (VSL) for use in environmental policy in Japan. Special attention was devoted to the effects of age and health characteristics on WTP. We find that the VSLs are somewhat lower (103 to 344 million yen) than those found in a virtually identical survey applied in some developed countries. These values were subject to a variety of validity tests, which they generally passed. We find that the WTP for those over age 70 is lower than that for younger adults, but that this effect is eliminated in multiple regressions. Rather, when accounting for other covariates, we find that WTP generally increases with age throughout the ages in our sample (age 40 and over). The effect of health status on WTP is mixed, with WTP of those with cancer being lower than that of healthy respondents, while the WTP of those with heart disease is greater. The VSLs for future risk changes are lower than those for contemporaneous risk reductions. The implicit discount rates of 5.8%–8.0% are relatively larger than the discount rate regularly used in environmental policy analyses. This survey is the first of its kind in Japan, and provides information that is directly useful for estimating the benefits of environmental and other policies that lower mortality risks to the general population and subgroups with a variety of specific traits.

Willingness to Pay for Mortality Risk Reductions: Does Latency Matter?

Using results from two contingent valuation surveys conducted in Canada and the U.S., we explore the effect of a latency period on willingness to pay (WTP) for reduced mortality risk using both structural and reduced form approaches. We find that delaying the time at which the risk reduction occurs by 10 to 30 years reduces WTP by more than half for respondents in both samples aged 40 to 60 years. Additionally, we estimate implicit discount rates equal to 8% for Canada and 4.5% for the U.S. – both well within the range established previously in the literature.

The Health Benefits of Air Pollution Control in Delhi

An important reason for controlling air pollutants such as particulate matter or sulfur dioxide is the damaging effects they have on human health. These effects include premature death as well as increases in the incidence of chronic heart and lung disease. Estimates of the health damages associated with air pollution are important because they can provide both an impetus for environmental controls and a means of evaluating the benefits of specific pollution control policies. To estimate the health damages associated with air pollution in developing countries, policy makers are often forced to extrapolate results from studies conducted in industrialized countries. These extrapolations, however, may be inappropriate for two reasons. First, it is not clear that the relationships found between pollution and health at the relatively low levels of pollution experienced in industrialized countries hold for the extremely high pollution levels witnessed in developing countries. Levels of particulate matter, for instance, are often three to four times higher in developing countries than in industrialized ones. Second, in developing countries, people die at younger ages and from different causes than do people in industrialized countries, implying that extrapolations of the impacts of air pollution on mortality may be especially misleading. This paper reports the results of a study relating levels of particulate matter to daily deaths in Delhi, India, between 1991 and 1994. We focus on Delhi, the capital of India, because it is one of the worlds most polluted cities. Between 1991 and 1994, the average total suspended particulate (TSP) level in Delhi was 375 micrograms per cubic meter-approximately five times the annual average standard of the World Health Organization (WHO). Levels of TSP in Delhi during this time period exceeded WHOs twenty-four-hour standard on 97% of all days on which readings were taken. Although particulate matter-produced by motor vehicles, smelters, the burning of refuse, and two coal-fired power plants-is Delhis main air pollution problem, levels of sulfur dioxide (SO2) and oxides of nitrogen (NOx) are below U.S. limits.

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.

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.