Brya n Hub b e ll Se nio r Adviso r o n So c ia l Sc ie nc e U.S. E - - PowerPoint PPT Presentation

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• r

What It’s Wor th: Why and How We Put a Dollar Value on Cle an Air

Brya n Hub b e ll

Se nio r Adviso r o n So c ia l Sc ie nc e U.S. E PA Offic e o f Re se a rc h a nd De ve lo pme nt

Why do we c a re a bout a ir pollution?

Source: Institute for Health Metrics Evaluation, GBD 2016. https://vizhub.healthdata.org/gbd-compare/

Air Pollution is Still a He alth Bur de n in the U.S.

E stima te d pre ma ture de a ths in 2016 fro m O 3 a nd PM2.5 = 125,000 to 313,000

Source: Fann N, Fulcher C, Baker K. 2013. The Recent and Future Health Burden of Air Pollution Apportioned Across U.S. Sectors. Environ. Sci. Technol., 2013, 47 (8), pp 3580–3589. DOI: 10.1021/es304831q

Still a T

• p 10 Risk F

a c tor in the U.S.

2005 Rank 2016 Rank

So urc e : I nstitute fo r He a lth Me tric s a nd E va lua tio n. GBD 2016, http:/ / www.he a lthda ta .o rg / unite d-sta te s

Air pollution he alth c osts ar e r e ally lar ge !

Wo rld Ba nk a nd I nstitute fo r He a lth Me tric s a nd E va lua tio n. 2016. T he Co st o f Air Po llutio n: Stre ng the ning the E c o no mic Case fo r Ac tio n. Wa shing to n, DC: Wo rld Ba nk. L ic e nse : Cre a tive Co mmo ns Attrib utio n CC BY 3.0 I GO

Global = $5,112 B

Nor th Ame r ic a = $495 B

Why Dollar s?

Do lla rs a re a n e a sily-re c o g nize d, c o mmo n unit fo r a dding up a c ro ss diffe re nt type s o f he a lth a nd e nviro nme nta l e ffe c ts Do lla rs re fle c t pe o ple ’ s pre fe re nc e s fo r he a lth a nd the e nviro nme nt re la tive to o the r g o o ds a nd se rvic e s g ive n a b udg e t c o nstra int Co sts a re e xpre sse d in do lla rs: b e ne fit-c o st a na lysis is o nly po ssib le if b e ne fits a re e xpre sse d in do lla rs a s we ll

How doe s E PA use e c onomic valuation in analyse s of air pollution?

Assig ning a c o st to the he a lth a nd e nviro nme nta l impa c ts o f a mb ie nt a ir po llutio n E stima ting the e c o no mic b e ne fits o f impro ve me nts in pub lic he a lth a nd the e nviro nme nt re sulting fro m a ir po llutio n re g ula tio ns

Be ne fit- Cost Asse ssme nts

• Pa rt o f the rule ma king pro c e ss

– Re q uire d unde r e xe c utive o rde r

• No t use d to se t the le ve l o f a ir q ua lity

sta nda rds

• Ca n he lp de c ide b e twe e n diffe re nt po lic ie s
• Ca n impro ve e ffic ie nc y
• Ca n he lp de te rmine if a pa rtic ula r po lic y is

“wo rth it” to so c ie ty

Ge ne ra l Princ iple s (How)

• E

PA Guide line s fo r Pre pa ring E c o no mic Ana lysis (Cha pte rs 6 a nd 7)

– https:/ / www.e pa .g o v/ e nviro nme nta l-

e c o no mic s/ g uide line s-pre pa ring -e c o no mic -a na lyse s

Be ne fits of Re duc e d Air Pollution

Magnitude of impacts

Millions Thousands Severity of Effects

A “Pyramid of Effects” from Air Pollution

Proportion of population affected

>90% of the monetized benefits T ens of Thousands

How do we me asur e the se be ne fits?

• Air q ua lity mo de ls te ll us

ho w a ir q ua lity is e xpe c te d to c ha ng e

• E

pide mio lo g y studie s g ive us c o nc e ntra tio n-re spo nse re la tio nships to pre dic t ho w he a lth e ffe c ts will c ha ng e

• E

c o no mic studie s te ll us ho w muc h the c ha ng e s in he a lth a nd we lfa re e ffe c ts a re wo rth

How do we va lue re duc e d he a lth risks?

• Co st o f illne ss (COI

)

– Ho w muc h do e s it c o st to g o to the ho spita l? – Do mo m o r da d ha ve to sta y ho me a nd miss

wo rk b e c a use a c hild is sic k?

– Ho w muc h pa y do yo u lo se b e c a use yo u a re

sic k a nd c a n’ t g o to wo rk?

• Willing ne ss to Pa y

– Ho w muc h is it wo rth to re duc e yo ur risk o f

de a th o r dise a se ?

– Ho w muc h is it wo rth to no t b e sic k? – Ho w muc h is it wo rth fo r yo ur c hild to no t b e

sic k?

Cost of Illne ss

• Dire c t do lla r sa ving s to

so c ie ty o f a vo iding a he a lth e ffe c t

• I

g no re s the va lue to individua ls o f re duc e d pa in a nd suffe ring

• Ge ne ra lly a lo we r

b o und whe n no WT P e stima te s a re a va ila b le

Willingne ss to Pay

• Me a sure s the c o mple te

va lue o f a vo iding a he a lth o utc o me

• Re lie s o n e ithe r

re ve a le d (what yo u do )

• r sta te d (what yo u say

yo u will do ) pre fe re nc e s fo r risk re duc tio ns

• Ge ne ra lly mo re

unc e rta in tha n COI

He a lth is worth a lot!

• I

n the U.S. we a re willing to pa y a b o ut $9

million (in today’s dollar s) to pre ve nt o ne e a rly

de a th a c ro ss the po pula tio n

• Avo iding ….

– a he a rt a tta c k sa ve s a b o ut $225,000 fo r

so me o ne b e twe e n 55 a nd 65 ye a rs o ld

– a ho spita l a dmissio n sa ve s a b o ut $17,000 to

$46,000 de pe nding o n type

– a n a sthma a tta c k sa ve s a b o ut $60

Re duc ing risk of pre ma ture de a th domina te s be ne fits

97.51% 1.43% 0.03% 0.29% 0.57% 0.89%

Mortality Heart Attacks Hospital and ER Admissions ER Visits Respiratory illnesses Asthma Attacks Lost Work Days Minor restricted activity days

Calc ulating the Value of a Statistic al L ife

In a po pula tio n o f 10,000, re duc ing po llutio n wo uld a v o id

• ne pre ma ture de a th

(i.e . re duc e risk b y 1 c ha nc e in 10,000) $500 • 10,000 = $5m VSL is the n WT P multiplie d b y the inv e rse o f the risk re duc tio n E a c h o f 10,000 a re willing to pa y $500 to re duc e risk o f de a th b y 1 c ha nc e in 10,000

T he VSL is NOTthe value of the life of a spe c ific pe r son

Ha rd va lua tion que stions

Sho uld risks fo r o lde r pe o ple b e va lue d le ss tha n fo r yo ung e r pe o ple ? Ho w a b o ut po o r pe o ple ? Ho w do we va lue e ffe c ts tha t mig ht no t o c c ur until o ur g ra ndc hildre n’ s g e ne ra tio n? Ho w sho uld we disc o unt? Ho w do we de a l with thing s tha t we c a n’ t put a do lla r va lue o n ye t? Sho uld the y b e c o unte d? I s it b e tte r to inc lude a ve ry unc e rta in va lue with a wide ra ng e o r no thing a t a ll?

T he “Se nior De a th Disc ount” Controve rsy

19

E c o no mic the o ry… …me e ts po lic y c o nstra ints U.S. PI RG use d this ima g e to pro te st the E PA’ s a pplic a tio n o f a VSL fo r pe o ple

• ve r 70 ye a rs o ld tha t wa s 37% lo we r

tha n tho se who a re yo ung e r

Disc ounting

• Disc o unting is o fte n use d to a c c o unt fo r

the time de la y b e twe e n a n a c tio n a nd its b e ne fits

• Pe o ple g e ne ra lly like to ha ve the ir

b e ne fits no w, so the va lue o f future b e ne fits to the m to da y is lo we r. T his re sults in disc o unting o f b e ne fits.

• E

PA typic a lly use s disc o unt ra te s o f 3 a nd 7%

20

200 400 600 800 1,000 1,200 2 4 6 8 10 12 14 16 18 20 Undiscounted Benefit Benefits at 3% DR Benefits at 7% DR

Pre se nt v a lue o f 20 ye a rs o f b e ne fits to da y: No disc o unting = $20,000 3% disc o unt ra te = $15,324 7% disc o unt ra te = $11,336

F re e a nd o pe n so urc e pro g ra m tha t a llo ws use rs to use da ta supplie d b y E PA o r the ir

• wn da ta to e stima te the he a lth a nd

e c o no mic b e ne fits o f va rio us a ir q ua lity sc e na rio s Ava ila b le a t: https:/ / www.e pa .g o v/ b e nma p

Ste ps to Ca lc ula ting E c onomic Va lue of He a lth Be ne fits in Be nMAP

Po lluta nt c ha ng e He a lth F unc tio ns He a lth impa c t Po pula tio n Ba se line inc ide nc e E c o no mic Va lua tio n F unc tio ns E c o no mic Va lue

Be nMAP F e atur e s

I nc lude s a ir q ua lity a nd de mo g ra phic da ta , da ta b a se s o f e c o no mic va lua tio n e stima te s a nd po lluta nt-re spo nse re la tio nships Allo ws use rs to lo a d the ir o wn a ir q ua lity da ta fro m mo nito rs o r mo de ls Allo ws use rs to pic k fro m pre -lo a de d he a lth impa c t func tio ns o r a dd the ir o wn Ha s a b uilt in Ge o g ra phic I nfo rma tio n Syste m so yo u c a n ma p yo ur re sults o r e xpo rt to sha pe file s I nc lude s e stima tio n o f unc e rta inty b o unds o n he a lth a nd e c o no mic e stima te s Ope n so urc e – c o de is a va ila b le upo n re q ue st o r dire c tly fro m GitHub

Ac c e pte d by the sc ie ntific c ommunity

Clo se to 100 pe e r- re vie we d a rtic le s using Be nMAP pub lishe d o ve r the la st 5 ye a rs – 65 o f the m b a se d o n U.S. a na lyse s Ma ny a dditio na l a pplic a tio ns use d fo r re g ula to ry pla nning a nd po lic y de ve lo pme nt

Used Around the World

27

Building Global Capacity

E nvironme nta l Costs of Air Pollution Va ry

• By type o f a mb ie nt po lluta nt
• By type o f e missio ns
• By so urc e type
• By lo c a tio n

Differences in 2016 PM Benefits for a Ton of Different Pollutants and Sources

Se c to r Dire c tly e mitte d PM2.5 SO2 NOx

Airc ra ft, loc omotives a nd ma rine vessels

$260,000 $89,000 $7,800

Area sourc es

$350,000 $54,000 $8,600

Cement kilns

$390,000 $48,000 $6,300

Coke ovens

$510,000 $58,000 $12,000

Elec tric a rc furna c es

$480,000 $89,000 $11,000

Elec tric ity g enera ting units

$140,000 $40,000 $6,000

F erroa lloy fa c ilities

$320,000 $50,000 $5,100

Industria l point sourc es

$540,000 $97,000 $15,000

Integ ra ted iron a nd steel

$560,000 $450,000 $18,000

Iron a nd steel fa c ilities

$340,000 $47,000 $7,400

Non-roa d mob ile sourc es

$290,000 $45,000 $7,000

Oc ea n-g oing vessels

$48,000 $13,000 $2,000

On-roa d mob ile sourc es

$400,000 $21,000 $8,300

Pulp a nd pa per fa c ilities

$170,000 $50,000 $4,200

Refineries

$350,000 $73,000 $7,300

Residentia l wood c ombustion

$400,000 $110,000 $15,000

T a c onite mines

$95,000 $38,000 $6,900

Re c e nt E xample of E c onomic Bur de n: Wildfir e Smoke

2012

Mo rta lity fro m a nnua l me a n e xpo sure s = 11,000 T

• ta l e c o no mic

va lue o f mo rta lity a nd ho spita l a dmissio ns in 2012 = $100 b illio n

Source: Fann et al, 2018. The health impacts and economic value of wildland fire episodes in the U.S.: 2008–2012. Science of The Total Environment Volumes 610–611, 1 January 2018, Pages 802-809

Re c e nt E xa mple o f Be ne fits: Me rc ury Air T

• xic s Sta nda rds

Health Impact Reduction in Incidence in 2016 Dollar Benefits in 2016 (millions of 2007$) Premature death 4,200 11,000 $34,000 $87,000 Non-fatal heart attacks 4,700 $500 Hospital admissions and ER visits 5,700 $50 Acute illness and symptoms 150,000 <$10 Asthma exacerbation 130,000 <$10 Lost work days 540,000 $10 Minor restricted activity days 3,200,000 $20

Total benefits = $37 to $90 billion (includes climate benefits) Total Costs = $9.6 billion Net Benefits = $27 to $80 billion

What is impor tant for e c onomic valuation?

Suppo rt fo r e stima ting ma rg ina l c ha ng e s in he a lth

• utc o me s

Ne e d e xpe c te d va lue s o f o utc o me s F

• c us o n he a lth e ndpo ints tha t a re a b le to b e va lue d b y

individua ls Unde rsta nd the time c o urse o f dise a se de ve lo pme nt Sho uld strive fo r e stima te s b a se d o n to ta l willing ne ss to pa y

Challe nge s in Valuing E me r ging He alth Conc e r ns: Ne ur

• de ve lopme ntal

E me rg ing impa c ts: ASD, c o g nitive de ve lo pme nt, ADHD Va lua tio n c ha lle ng e s:

• De fining o utc o me s me a ning ful

to c hildre n a nd the ir fa milie s

• E

stima ting c o sts o f se rvic e utiliza tio n

• I

nc o rpo ra ting impa c ts o n fa milie s a nd q ua lity o f life

• E

stima ting life time impa c ts o n inc o me

Cha lle ng e s in Va luing E me rg ing He a lth Conc e rns: Re produc tive

E me rg ing impa c ts: lo w b irth we ig ht (L BW), pre -te rm b irth (PT B) Va lua tio n c ha lle ng e s:

– Re la tio nship b e twe e n L

BW o r PT B a nd

• ve ra ll infa nt he a lth a nd life time

he a lth (a nd inc o me ) is unc le a r

– Diffe re nc e s in c o sts c a n b e

c o nfo unde d b y ma te rna l c ha ra c te ristic s

– Sta te d WT

P ma y unde rsta te c o sts due to lo w pa re nta l unde rsta nding o f c o sts o f L BW

– No nline a r c o sts a s a func tio n o f b irth

we ig ht (inc re a sing ly hig he r c o sts fo r ve ry L BW)

– Po te ntia l irre ve rsib ility o f o utc o me s

Be yond Dollar s

E nviro nme nta l Justic e E q uity

Children in Wilmington, CA walk near an oil refinery

Huma n we ll-b e ing

Environmental Economic Societal Human Well- Being