Variations in the estimates of the costs and benefits of policies to reduce air pollution can be so wide as to make analysis pointless, writes John Appleby
As any London cyclist will testify, there are costs and benefits associated with biking round the capital. Speeding past traffic jams and avoiding the armpit-and-early-morning-breath smell of crowded tube trains are noted benefits. But the costs include unintended contributions to the UK transplant programme and smarting eyes and irritated lungs from inhaled traffic fumes.
A recent attempt to grapple with the impact of policies to reduce air pollution found it difficult to accurately quantify costs and benefits.1 For cyclists (and more pertinently, elderly people, whose health is particularly at risk from air pollution) there is certainly a demand to reduce the risks of death and disability. Cyclists literally put their money where their mouths are when they buy face masks. But whether they are willing to pay the costs (in reality or hypothetically) of the trade-off between lower pollution and, say, higher prices of goods and services caused by stricter pollution control for vehicles is another matter.
Although weighing up costs and benefits makes intuitive sense, the uncertainties surrounding the valuation in monetary terms of the benefits and the costs (ie forgone benefits) of policies to reduce air pollution can be so great as to render the analysis almost useless. The Department of Health's report on the economic appraisal of the health effects of air pollution provides two estimates for the value of a (statistical) life lost due to air pollution: the upper estimate is£1.4m, the lower estimate£2,600.
The problem with such widely varying estimates is that the eventual valuation of the total benefits of, say, reducing air pollution by a certain fraction also vary widely. Set against the costs, virtually any pollution-reducing policy can become acceptable (or not) depending on which estimate of the benefits is used. For example, the DoH's report values the total health benefits of reducing sulphur dioxide by 1 microgram as varying between£500,000 and£440m.
The uncertainties stem from the dearth of hard evidence (and hence the need for guesswork) about people's willingness to pay and the actual health effects of air pollution. An alternative to converting the health effects into money is to leave them in natural units such as hospital admissions avoided or years of life extended. If health impact assessments and health policy appraisals in general are to have a noticeable effect on government decisions, a substantial investment in primary epidemiological and economic research is needed.
1 Department of Health. Economic Appraisal of the Health Effects of Air Pollution. The Stationery Office, 1999.