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Mortality Risk Valuation for Environmental Policy

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  • Krupnick, Alan

    ()
    (Resources for the Future)

  • Cropper, Maureen
  • Alberini, Anna
  • Simon, Nathalie
  • Itaoka, Kenshi
  • Akai, Makoto

Abstract

Most benefit-cost analyses of reductions in air pollutants and other pollutants carrying mortality risks rely on estimates of the value of reductions in such risks produced by compensating wage studies, or contingent valuation studies that value risk reductions in the context of transport or job-related accidents. As the authors argue below, these estimates are inappropriate when valuing risk changes produced by environmental programs. The objectives of this paper are to explain why these estimates are inappropriate and to describe an improved approach to valuing reductions in risk of death from environmental programs, especially programs to reduce air pollution. The authors have implemented this approach in a pilot study in Tokyo, Japan. The paper provides estimates of the value of a statistical life based on the pilot study and describes extensions of the approach based on test results. The preliminary results from the Tokyo pilot indicate that individuals are able to distinguish between different magnitudes of small changes in mortality risks and between the same change in these risks occurring at different times (although the latter has not yet been subjected to an external scope test). Changes to the survey and a big increase in sample size may improve performance on the internal validity tests and the results of the scope tests. Although the current results can only be considered suggestive, if they were to remain after administration of the survey to a larger sample, and subject to some other caveats, they would imply that the VSL's currently used in benefit-cost analyses of environmental policies are significant overestimates.

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Bibliographic Info

Paper provided by Resources For the Future in its series Discussion Papers with number dp-99-47.

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Date of creation: 01 Aug 1999
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Handle: RePEc:rff:dpaper:dp-99-47

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  1. Johannesson, Magnus & Johansson, Per-Olov, 1996. "To Be, or Not to Be, That Is the Question: An Empirical Study of the WTP for an Increased Life Expectancy at an Advanced Age," Journal of Risk and Uncertainty, Springer, vol. 13(2), pages 163-74, September.
  2. Cropper, Maureen L. & G. Sussman, Frances, 1990. "Valuing future risks to life," Journal of Environmental Economics and Management, Elsevier, vol. 19(2), pages 160-174, September.
  3. Cropper, Maureen L & Sussman, Frances G, 1988. "Families and the Economics of Risks to Life," American Economic Review, American Economic Association, vol. 78(1), pages 255-60, March.
  4. Daniel S. Hamermesh, 1982. "Expectations, Life Expectancy, and Economic Behavior," NBER Working Papers 0835, National Bureau of Economic Research, Inc.
  5. Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1994. "Preferences for Life Saving Programs: How the Public Discounts Time and Age," Journal of Risk and Uncertainty, Springer, vol. 8(3), pages 243-65, May.
  6. Jones-Lee, M W & Hammerton, M & Philips, P R, 1985. "The Value of Safety: Results of a National Sample Survey," Economic Journal, Royal Economic Society, vol. 95(377), pages 49-72, March.
  7. Smith, V Kerry & Desvousges, William H, 1987. "An Empirical Analysis of the Economic Value of Risk Changes," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 89-114, February.
  8. Moore, Michael J & Viscusi, W Kip, 1988. "The Quantity-Adjusted Value of Life," Economic Inquiry, Western Economic Association International, vol. 26(3), pages 369-88, July.
  9. Jones-Lee, M W, 1991. " Altruism and the Value of Other People's Safety," Journal of Risk and Uncertainty, Springer, vol. 4(2), pages 213-19, April.
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Cited by:
  1. Olivier Chanel & Pascale Scapecchi & Jean-Christophe Vergnaud, 2006. "How to correctly assess mortality benefits in public policies," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 49(5), pages 759-776.
  2. Henrik Hammar & Olof Johansson-Stenman, 2004. "The value of risk-free cigarettes - do smokers underestimate the risk?," Health Economics, John Wiley & Sons, Ltd., vol. 13(1), pages 59-71.
  3. Thijs Dekker & Roy Brouwer & Marjan Hofkes & Klaus Moeltner, 2011. "The Effect of Risk Context on the Value of a Statistical Life: a Bayesian Meta-model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(4), pages 597-624, August.
  4. Dominika Parry Dziegielewska & Robert Mendelsohn, 2005. "Valuing Air Quality in Poland," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 30(2), pages 131-163, 02.
  5. André de Palma & Néjia Zaouali, 2007. "Monétarisation des externalités de transport : un état de l'art," THEMA Working Papers 2007-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.

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