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Valuing Environmental Health Effects – An Economic Perspective

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  • A. Freeman

Abstract

This paper provides an overview of some of the issues involved in comparing benefit-cost analysis and cost-effectiveness analysis based on quality-adjusted life-years as alternative approaches to assessing environmental policies that affect human health. It concludes that: (i) although QALYs have the advantage of reflecting policy impacts on both health status and longevity in a single scalar measure, they are not consistent with utility theory unless individuals’ preferences satisfy some restrictive conditions; (ii) they do not capture other important aspects of the valuation of changes in mortality and morbidity; (iii) cost-effectiveness analysis based on QALYs as a measure of effectiveness omits non-health related effects of environmental policy; and (iv) it leaves unanswered the important question of what level of environmental regulation is appropriate. Copyright Springer 2006

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  • A. Freeman, 2006. "Valuing Environmental Health Effects – An Economic Perspective," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 34(3), pages 347-363, July.
    • Handle: RePEc:kap:enreec:v:34:y:2006:i:3:p:347-363
    DOI: 10.1007/s10640-006-9002-6
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    1. 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.

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    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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