Quantifying and Valuing Environmental Health Risks

This chapter provides an overview of the current methodology for assessing environmental health risks. Our primary focus is on the practices that U.S. regulatory agencies use for assessing cancer risk, although we also provide a brief comparison to the methodology used in Western Europe. We then discuss the potential biases that may be inherent in the various components of the assessment methodology, and we discuss the implications of these biases towards regulatory policy. This chapter also provides an overview of the current methodology for valuing risks of both mortality and morbidity, placing particular emphasis on ex ante measurements of individuals' willingness to pay for risk reductions. We present the underlying theory, the estimation concerns, and the policy implications of labor market, housing market, and survey studies of estimating the value of risk reductions. Once we have established the economic framework of efficient regulatory policies, we then provide an overview of the extent to which U.S. regulatory performance meets these efficiency goals and offer suggestions for better achieving these goals.