List of abbreviations AAP ambient air pollution AOP ambient ozone pollution APMP ambient particulate matter pollution AQG air quality guidelines B/C benefit-cost(ratio) BOD burden of disease CAAA Clean Air Act Amendments CAFE Clean Air for Europe CAPP Clean Air Policy Package CBA cost-benefit analysis CLE current legislation(scenario) DALY disability-adjusted life-years DRG diagnosis-related group EEA European Environment Agency EU European Union GBD global burden of disease GDP gross domestic product HAP household air pollution IARC International Agency for Research on Cancer IHME Institute for Health Metrics and Evaluation LYL life-years lost MIT Massachusetts Institute of Technology MTFR maximum technically feasible reduction NO. nitrogen oxides OECD Organisation for Economic Co-operation and Development PM particulate matter PPP purchasing power parity QALY quality-adjusted life-years US$ United States dollar EPA (United States)Environmental Protection Agency VOLY value of a life-year VSL value of a statistical life VSLY value of a statistical life-year WHO World Health Organization WTP willingness to pay YLD years of life lost to disability YLL years of life lost vi
vi List of abbreviations AAP ambient air pollution AOP ambient ozone pollution APMP ambient particulate matter pollution AQG air quality guidelines B/C benefit–cost (ratio) BOD burden of disease CAAA Clean Air Act Amendments CAFE Clean Air for Europe CAPP Clean Air Policy Package CBA cost–benefit analysis CLE current legislation (scenario) DALY disability-adjusted life-years DRG diagnosis-related group EEA European Environment Agency EU European Union GBD global burden of disease GDP gross domestic product HAP household air pollution IARC International Agency for Research on Cancer IHME Institute for Health Metrics and Evaluation LYL life-years lost MIT Massachusetts Institute of Technology MTFR maximum technically feasible reduction NOX nitrogen oxides OECD Organisation for Economic Co-operation and Development PM particulate matter PPP purchasing power parity QALY quality-adjusted life-years US$ United States dollar EPA (United States) Environmental Protection Agency VOLY value of a life-year VSL value of a statistical life VSLY value of a statistical life-year WHO World Health Organization WTP willingness to pay YLD years of life lost to disability YLL years of life lost
Acknowledgements This report was first prepared for the Braathen (Organisation for Economic WHO Regional Office for Europe by Dr Co-operation and Development). Rana Roy,with research assistance from David Weiss and Stuart Baird. Contributions and comments from Mike Holland,Eliza Lanzi and all participants Dr Roy's initial report was reviewed and at the November 2014 WHO meeting are discussed at an expert WHO meeting held gratefully acknowledged.Srdan Matic, in Bonn,Germany,on 27-28 November Elizabet Paunovic,Marie-Eve Heroux, 2014.Following the meeting,Dr Roy Francesca Racioppi,Dorota Jarosinska developed this final version of the report, and Bianca Bortot (WHO Regional Office in collaboration with Marco Martuzzi and for Europe)also contributed to the project Frank George (WHO European Centre for and to completing this report. Environment and Health),and Nils Axel CHRISsadowski/iStock vii
vii This report was first prepared for the WHO Regional Office for Europe by Dr Rana Roy, with research assistance from David Weiss and Stuart Baird. Dr Roy’s initial report was reviewed and discussed at an expert WHO meeting held in Bonn, Germany, on 27–28 November 2014. Following the meeting, Dr Roy developed this final version of the report, in collaboration with Marco Martuzzi and Frank George (WHO European Centre for Environment and Health), and Nils Axel Braathen (Organisation for Economic Co-operation and Development). Contributions and comments from Mike Holland, Eliza Lanzi and all participants at the November 2014 WHO meeting are gratefully acknowledged. Srdan Matic, Elizabet Paunovic, Marie-Eve Heroux, Francesca Racioppi, Dorota Jarosinska and Bianca Bortot (WHO Regional Office for Europe) also contributed to the project and to completing this report. Acknowledgements © CHRISsadowski/iStock
Executive summary This study reports on the economic Owing to a multi-year research effort cost of the public health impacts of spearheaded by the Organisation for ambient and household air pollution,with Economic Co-operation and Development particular reference to the countries of (OECD),a set of values for average adult the WHO European Region. VSL in 2005 is now available,along with a method to compute country-specific Current estimates of the joint effects VSL values for countries both within and of ambient and household air pollution outside the OECD and for years beyond include an estimated 7 million premature 2005. deaths globally each year,representing one in eight of the total deaths worldwide. In contrast,a standard and commonly agreed method by which to measure In the WHO European Region as a whole, the cost of morbidity is not yet available. the estimated mortality in 2010 was Research is currently being progressed approximately 600 000 premature deaths, toward establishing an agreed method which represents a marked decrease and agreed values but at present this from 2005 for the Region overall.Only research can only proceed with indicative half-a-dozen countries out of the 53 estimates.Recent practice and available WHO European Region Member States evidence provide a rationale for using registered a slight increase in deaths.The an additional 10%of the overall cost evidence from epidemiology underpinning of mortality as a best estimate for the these estimates is well established,while additional cost of morbidity. the evidence from economics shows that ambient and household air pollution also On the basis of this method,and these imposes an economic cost to society of approaches and assumptions,it is several trillion dollars per year,globally. possible to estimate the economic cost of air pollution health impact in the Present-day economics uses a standard countries of the WHO European Region. method for assessing the cost of As of 2010: mortality at the level of society:the "value of statistical life"(VSL),as derived from the annual economic cost of premature deaths from air pollution across the aggregating individuals'willingness to pay to secure a marginal reduction in countries of the WHO European Region stood at US$1.431 trillion;and the risk of premature death.This permits researchers and policy-makers to assess the overall annual economic cost of the comparative magnitude of the value health impacts and mortality from that societies attach to a given health air pollution,including estimates for impact,and of proposals to mitigate it, morbidity costs,stood at US$1.575 using money as a common metric.The trillion. economic cost of a mortality impact is given by the VSL value,multiplied by These results are relatively robust,in the number of premature deaths.The that the most common variations on economic benefit of a mitigating action this method and these assumptions do becomes the same VSL value,multiplied not alter the overarching conclusion: by the number of prevented premature the health impact of air pollution is deaths. substantial,and given that good health vili
viii Executive summary This study reports on the economic cost of the public health impacts of ambient and household air pollution, with particular reference to the countries of the WHO European Region. Current estimates of the joint effects of ambient and household air pollution include an estimated 7 million premature deaths globally each year, representing one in eight of the total deaths worldwide. In the WHO European Region as a whole, the estimated mortality in 2010 was approximately 600 000 premature deaths, which represents a marked decrease from 2005 for the Region overall. Only half-a-dozen countries out of the 53 WHO European Region Member States registered a slight increase in deaths. The evidence from epidemiology underpinning these estimates is well established, while the evidence from economics shows that ambient and household air pollution also imposes an economic cost to society of several trillion dollars per year, globally. Present-day economics uses a standard method for assessing the cost of mortality at the level of society: the “value of statistical life” (VSL), as derived from aggregating individuals’ willingness to pay to secure a marginal reduction in the risk of premature death. This permits researchers and policy-makers to assess the comparative magnitude of the value that societies attach to a given health impact, and of proposals to mitigate it, using money as a common metric. The economic cost of a mortality impact is given by the VSL value, multiplied by the number of premature deaths. The economic benefit of a mitigating action becomes the same VSL value, multiplied by the number of prevented premature deaths. Owing to a multi-year research effort spearheaded by the Organisation for Economic Co-operation and Development (OECD), a set of values for average adult VSL in 2005 is now available, along with a method to compute country-specific VSL values for countries both within and outside the OECD and for years beyond 2005. In contrast, a standard and commonly agreed method by which to measure the cost of morbidity is not yet available. Research is currently being progressed toward establishing an agreed method and agreed values but at present this research can only proceed with indicative estimates. Recent practice and available evidence provide a rationale for using an additional 10% of the overall cost of mortality as a best estimate for the additional cost of morbidity. On the basis of this method, and these approaches and assumptions, it is possible to estimate the economic cost of air pollution health impact in the countries of the WHO European Region. As of 2010: • the annual economic cost of premature deaths from air pollution across the countries of the WHO European Region stood at US$ 1.431 trillion; and • the overall annual economic cost of health impacts and mortality from air pollution, including estimates for morbidity costs, stood at US$ 1.575 trillion. These results are relatively robust, in that the most common variations on this method and these assumptions do not alter the overarching conclusion: the health impact of air pollution is substantial, and given that good health
and a long life are obviously highly valued States,in terms of health impacts and by society,economic analyses show that costs,even in the absence of a pricing the economic cost of air pollution -and system capable of taking full account of hence the benefits of cleaner air-are externalities. very large. However,in view of the persistence of the In comparing these huge estimated problem of air pollution in Europe,filling societal costs to country-specific gross existing knowledge gaps and correcting domestic product figures,the significance distortions in taxes and subsidies-for and magnitude of these costs become example,the preference of diesel over even more evident:in 44 WHO European petrol-remains highly desirable. Member States the societal costs are equivalent to more than 1%of the To pursue this goal,operating in the respective gross domestic product and anticipated period of time until a full in only four of the 48 Member States correction of prices can be achieved, considered in the analysis do these there is a case for conceiving the societal costs amount to less than 1%. chronological framework of correction following the approach:regulation Available evidence on air pollution investment pricing,based on: emission sources suggests that,across the WHO European Region as a whole, strengthening existing regulation and compliance; several sectors should be targeted for abatement policies.Motorized road using available evidence on external transport,household fuel combustion costs in relevant investment decisions; together with agriculture and industrial and coal burning sources are of special closing the information gaps required concern,in terms of their contribution to prepare a model of fully corrected to the health impact of ambient and prices. household air pollution,and the consequent societal costs. The framework presented above-and discussed in further detail in the present A relatively successful,if imperfect, report-can be used to provide practical regulatory regime on air quality in Europe guidance on where and how to strengthen has resulted in substantial progress, the policy response to the problem of air especially in European Union Member pollution's health impacts. ⅸ
ix States, in terms of health impacts and costs, even in the absence of a pricing system capable of taking full account of externalities. However, in view of the persistence of the problem of air pollution in Europe, filling existing knowledge gaps and correcting distortions in taxes and subsidies – for example, the preference of diesel over petrol – remains highly desirable. To pursue this goal, operating in the anticipated period of time until a full correction of prices can be achieved, there is a case for conceiving the chronological framework of correction following the approach: regulation + investment + pricing, based on: • strengthening existing regulation and compliance; • using available evidence on external costs in relevant investment decisions; and • closing the information gaps required to prepare a model of fully corrected prices. The framework presented above – and discussed in further detail in the present report – can be used to provide practical guidance on where and how to strengthen the policy response to the problem of air pollution’s health impacts. and a long life are obviously highly valued by society, economic analyses show that the economic cost of air pollution – and hence the benefits of cleaner air – are very large. In comparing these huge estimated societal costs to country-specific gross domestic product figures, the significance and magnitude of these costs become even more evident: in 44 WHO European Member States the societal costs are equivalent to more than 1% of the respective gross domestic product and in only four of the 48 Member States considered in the analysis do these societal costs amount to less than 1%. Available evidence on air pollution emission sources suggests that, across the WHO European Region as a whole, several sectors should be targeted for abatement policies. Motorized road transport, household fuel combustion together with agriculture and industrial coal burning sources are of special concern, in terms of their contribution to the health impact of ambient and household air pollution, and the consequent societal costs. A relatively successful, if imperfect, regulatory regime on air quality in Europe has resulted in substantial progress, especially in European Union Member
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