Monetary values for impacts to human health

Monetary values used for evaluation of impacts to human health in NEEDS:

The following text is taken from the project NEEDS, which is part of the ExternE project series (www.externe.info). ExternE mainly deals with impacts of pollutants (classical air pollutants, heavy metals, etc.), noise, and greenhouse gases on human health, ecosystems, materials and crops.

This summary "focuses on the main contributors of impacts to human health in terms of external costs. These are change of life expectancy (LE) and chronic bronchitis.

The overall objective of NEEDS, RS1b, work package 6 is to obtain more reliable and credible results for the value of a life year (VOLY) lost by air pollution mortality, one of the most important parameters of ExternE and until now one of the most uncertain. The new values are derived from the work of a team of European experts, based on the results of a new contingent valuation (CV) questionnaire that has been applied in 9 countries: France, Spain, UK, Denmark, Germany, Switzerland, Czech Republic, Hungary, and Poland. The total sample size is 1463. A procedure for transferring the results to other countries has also been developed and tested.

The approach is innovative because it is based on valuing the change of life expectancy (LE) directly, in contrast to previous valuations of air pollution mortality that were based either on risks of death in a transport or employment-related accident context, or on a small change in the probability of dying in other contexts. There are some reasons for basing the valuation on loss of LE rather than a number of premature deaths, as recognized by ExternE since 1998. The principal reason is that the underlying epidemiological evidence only allows to quantify changes in life expectancy (life years), not changes in number of deaths.

Based on the results of this questionnaire, our recommended VOLY estimates are for EU15 + Switzerland: 41,000 € for New Member Countries (NMC): 33,000 €

However, for cost-benefit analyses of EU directives and policies we would recommend using the same value for EU25 ("EU26", including Switzerland), based on the VOLY value from the pooled sample. This estimate may itself be adjusted to correct for the difference in the proportion of "EU16" and NMC observations in our sample and the actual populations for EU25: 40,000 €

These values are somewhat lower than the 50,000€ used by ExternE since the NewExt project.

The QALY scale used by health economists is combined with the new VOLY to obtain an implied cost for morbidity endpoints, in particular chronic bronchitis, the end point making the second largest contribution after mortality (about 25%) to the total damage cost of PM, NO₂ and SO₂. Until now the cost of chronic bronchitis assumed by ExternE has remained quite uncertain because it has been based on only two CV studies in the USA (that use essentially the same questionnaire), dating from 1990 and 1991, and the application of the results of those studies poses problems in terms of the legitimacy of the spatial and temporal transfer entailed. The result of the QALY approach turns out to be so close to the 200,000 € currently used for chronic bronchitis by ExternE, that no change is recommended.

The following table lists the monetary values used for valuation of impacts to human health in NEEDS. Apart from the updates made within NEEDS the values are taken from (ExternE, Methodology 2005 Update: European Commission (2005). ExternE - Externalities of Energy - Methodology 2005 Update. EUR 21951 EN. Office for Official Publications of the European Communities, Luxembourg. ISBN 92-79-00423-9. www.externe.info)."

Health endpoint	Monetary values [EURO2000]
Medication use / bronchodilator use	1
Minor restricted activity days (MRAD)	38
Lower respiratory symptoms (adult)	38
Lower respiratory symptoms (child)	38
Cough days	38
Acute respiratory symptoms	38
Consultations with primary care physicians_Asthma	53
Consultations with primary care physicians_Upper respiratory diseases	75
Consultations with primary care physicians for allergic rhinitis	75
Work loss days (WLD)	82
Restricted activity days (RADs)	130
Respiratory hospital admissions	2,000
Cardiac hospital admissions	2,000
Life expectancy reduction - YOLLchronic	40,000
Increased mortality risk (infants) YOLLchronic	40,000
Increased mortality risk YOLLacute	60,000
New cases of chronic bronchitis	200,000

Methodological issue to be considered (please see also D18_Risk_characterisation_methodology_report):

• The given numbers are for impacts on human health by air pollutants only. The outcomes and values haven been selected/determined in an interative process considering both the relevance of the health impact and the possibility of quantification.
• Caution: The health endpoints of the study-site and the policy-site must be consistent (example: What is a chronic cough? A cough that lasts 2 months or 10 years?).
• The preferencial method to receive monetary values for health endpoints (like those in the table) is the contingent valuation method which implies to ask people for their willingness to pay to reduce a given health risk. If this method is not applicable but for a specific health endpoint DALYs and YOLLs can be estimated, then monetary values for YOLLs can be taken to calculate the value of a health end point. Caution: The two methods cannot simply be mixed. Most values differ for the two methods because the DALY-approach uses expert elicitation for severity weights while the contingent value method asks directly for the preference of the population.
• The values derived with the contingent valuation method in ExternE apply to small risks, like having an asthma attack or die half a year earlier than normal. They cannot be used to value big risks, such as a sudden death due to a car accident.
• YOLLacute: example: an elderly person is so ill that he would have died anyway but due to high ozone concentration dies a day earlier
• YOLLchronic: mortality that happens in the future; at the end of his life a person dies a day earlier because of the air pollution he has suffered years ago (in theory the value is the discounted value for an acute YOLL; in practice the values are derived the other way round: the questionnaire asks for chronic YOLLs and the acute YOLLs are derived from this)

References

• Desaigues, B., D. Ami, M. Hutchison, A. Rabl, S. Chilton, H. Metcalf, A. Hunt, R. Ortiz, S. Navrud, P. Kaderjak, R. Szántó, J. S. Nielsen, C. J. e. S. Pellegrini, M. B. Kohlová, M. Scasny, V. Máca, J. Urban, M.-E. Stoeckel, A. Bartczak, O. Markiewicz, P. Riera and V. Farreras (2007). Final Report on the monetary valuation of mortality and morbidity risks from air pollution. NEEDS project, FP6, Rs1b_D6.7.
• European Commission (2005). ExternE - Externalities of Energy: Methodology 2005 update, http://www.externe.info/brussels/methup05.pdf

See also

• Publications about environmental efficiency and productivity by Mika Kortelainen: a method to derive a single-dimensional efficiency index from multi-dimensional input [1].