Improving Policy Responses to the Risk of Air Pollution

Abstract

This paper offers a brief review of the need for cost–benefit analysis (CBA) and the available policy instruments for air pollution. To prioritize different possible actions, one needs to know which source of pollution causes how much damage. This requires an impact pathway analysis, that is, an analysis of the chain emission → dispersion → dose-response function → monetary valuation. The methodology for this is described and illustrated with the results of the ExternE (External Costs of Energy) project series of the European Commission. Two examples of an application to CBA are shown: one where a proposed reduction of emission limits is justified, and one where it is not. It is advisable to subject any proposed regulation to a CBA, including an analysis of the uncertainties. Even if the uncertainties are large and a policy decision may have to take other considerations into account, a well-documented CBA clarifies the issues and provides a basis for rational discussion. One of the main sources of uncertainty lies in the monetary valuation of premature mortality, the dominant contribution to the damage cost of air pollution. As an alternative, an innovative policy tool is described, the Life Quality Index (LQI), a compound indicator comprising societal wealth and life expectancy. It is applied to the Canada-wide standards for particulate matter and ozone. Regardless of monetary valuation, a 50% reduction of PM₁₀ concentrations in Europe and North America has been shown to yield a population-average life expectancy increase on the order of 4 to 5 mo.

The work of Ari Rabl has been supported in part by the ExternE project series of the European Commission, DG Research; Fintan Hurley has been supported by ExternE and by the UK Department of Health. We thank numerous colleagues who have been involved in discussing and developing the ideas presented here.

Notes

Desaigues, B., and Rabl, A. 2001. Pollution tax and other policy instruments: Who pays what? Pollut. Atmos. (Special Issue) December: 27–40.

ExternE. 1995. ExternE: Externalities of energy, Vol. 1, Summary (EUR 16520); vol. 2, Methodology (EUR 16521); vol. 3, Coal and lignite (EUR 16522); vol. 4, Oil and gas (EUR 16523); vol. 5, Nuclear (EUR 16524); vol. 6, Wind and hydro fuel cycles (EUR 16525). Luxembourg: European Commission, Directorate-General XII, Science Research and Development. Office for Official Publications of the European Communities

ExternE. 1998. ExternE: Externalities of energy, vol. 7, Methodology 1998 update (EUR 19083); vol. 8, Global warming (EUR 18836); vol. 9, Fuel cycles for emerging and end-use technologies, transport and waste (EUR 18887); Vol. 10, National implementation (EUR 18528). Luxembourg: European Commission, Directorate-General XII, Science Research and Development. Office for Official Publications of the European Communities. Results are also available at http://ExternE.jrc.es/publica.html

ExternE. 2000. External costs of energy conversion—Improvement of the ExternE methodology and assessment of energy-related transport externalities. Final report for contract JOS3-CT97-0015, EC Directorate General for Research. P. Bickel et al., IER, Universität Stuttgart. Also published as Environmental external costs of transport, eds. R. Friedrich and P. Bickel. Berlin: Springer Verlag, 2001.

Holland, M. 2001. Applications of the ExternE methodology. Pollut. Atmos. (Special Issue) December: 69–75.

Mechler, R., Amann, M., and Schöpp, W. 2002. A methodology to estimate changes in statistical life expectancy due to the control of particulate matter air pollution. Interim Report IR-02–035, May. www.iiasa.ac.at

Rabl, A., Spadaro, J. V., and Desaigues, B. 1998b. Analyse coÛt-bénéfice des politiques de la lutte contre la pollution: Validation d’outils à partir du cas de la pollution particulaire de l’air en IdF. Report for INSERM, Centre d’Energétique, Ecole des Mines.

U.S. Department of Energy. 2003. Valuing Externalities Workshop, February 20–21, McLean, VA. Proceedings at www.netl.doe.gov.