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Economic Valuation of Health for Environmental Policy: Comparing Alternative Approaches. Introduction and Overview

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  • Mark Dickie

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  • John List

Abstract

Protecting human health is a primary goal of environmental policy and economic evaluation of health can help policy-makers judge the relative worth of alternative actions. Economists use two distinct approaches in normatively evaluating health. Whereas environmental economists use benefit-cost analysis supported by monetary valuation in terms of willingness-to-pay, health economists evaluate interventions based on cost-effectiveness or cost-utility analysis (CEA), using quality-adjusted life-years (QALY) or similar indexes. This paper provides background on the controversy about the relative merits of these approaches and introduces the remaining papers in the special issue. These papers (with one exception) were presented at a conference sponsored by the Department of Economics at the University of Central Florida with support from the US Environmental Protection Agency. Although CEA might not lead to substantially different implications for environmental policy than benefit-cost analysis, and QALY may provide a benefit transfer tool to fill gaps in the morbidity valuation literature, the papers in this issue raise serious concerns about the suitability of QALY-based CEA for environmental regulatory analysis. QALY does not in general appropriately represent individual preferences for health and CEA is neither independent of income distribution nor adequate to assess efficiency. Copyright Springer Science+Business Media B.V. 2006

Suggested Citation

  • Mark Dickie & John List, 2006. "Economic Valuation of Health for Environmental Policy: Comparing Alternative Approaches. Introduction and Overview," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(3), pages 339-346, July.
  • Handle: RePEc:kap:enreec:v:34:y:2006:i:3:p:339-346 DOI: 10.1007/s10640-006-9008-0
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    References listed on IDEAS

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    1. Bryan Hubbell, 2006. "Implementing QALYs in the Analysis of Air Pollution Regulations," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(3), pages 365-384, July.
    2. George L. Van Houtven & Subhrendu K. Pattanayak & V. Kerry Smith, 2004. "Benefit Transfer Functions for Avoided Morbidity: A Preference Calibration Approach," NCEE Working Paper Series 200404, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Apr 2004.
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    Citations

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    Cited by:

    1. Natina Yaduma & Mika Kortelainen & Ada Wossink, 2013. "Estimating Mortality and Economic Costs of Particulate Air Pollution in Developing Countries: The Case of Nigeria," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(3), pages 361-387, March.
    2. Cameron, Trudy Ann & DeShazo, J.R., 2013. "Demand for health risk reductions," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 87-109.
    3. Don Kenkel, 2006. "WTP- and QALY-Based Approaches to Valuing Health for Policy: Common Ground and Disputed Territory," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(3), pages 419-437, July.
    4. Zylicz, Tomasz, 2010. "Goals and Principles of Environmental Policy," International Review of Environmental and Resource Economics, now publishers, vol. 3(4), pages 299-334, May.
    5. Katherine Stackelberg & James Hammitt, 2009. "Use of Contingent Valuation to Elicit Willingness-to-Pay for the Benefits of Developmental Health Risk Reductions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 43(1), pages 45-61, May.
    6. Olimpia Markiewicz & Anna Bartczak & Agnieszka Markowska, 2007. "Wartość dodatkowego roku przeżycia w Polsce," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 19.
    7. Jason F. Shogren & Tommy Stamland, 2005. "Self-Protection and Value of Statistical Life Estimation," Land Economics, University of Wisconsin Press, vol. 81(1).
    8. Hammitt, James K. & Haninger, Kevin, 2017. "Valuing nonfatal health risk as a function of illness severity and duration: Benefit transfer using QALYs," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 17-38.

    More about this item

    Keywords

    benefit-cost analysis; cost-effectiveness analysis; environmental policy; quality adjusted life years; regulatory analysis; value of a statistical life; willingness to pay; Q2; I18; J17; D61; H23;

    JEL classification:

    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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