Venue: The Fuqua School of Business, Duke University, 1 Towerview Drive, Durham, NC 27708-0120

 

Presentation

Assessing the value of a life year (VOLY) using contingent valuation in the context of air pollution

Authors: Claude Jeanrenaud (University of Neuchâtel); Joachim Marti (University of Neuchâtel); Sonia Pellegrini (Federal Office of the Environment, Switzerland)

Presenter: Claude Jeanrenaud (University of Neuchâtel)

Session: Poster Session

Room: Kirby Winter Garden

When: Monday 2:30 p.m. - 3:15 p.m.

Epidemiological studies suggest that air pollution results in loss of life expectancy (LE). In its fourth assessment, The European Environment Agency (EEA) concluded that the high level of exposure to anthropogenic PM2.5 measured in EU in 2000 is reducing life expectancy by approximately one year. However, the average loss may reach two years in the most polluted areas and about six months in less polluted countries like Switzerland.

The aim of the study is to assess the value of a life year (VOLY) lost as a consequence of air pollution. The effect of air pollution on LE being relatively small, it makes it a very different case from the standard one, traffic accidents. The usual metric to assess mortality costs ? the value of a statistical life (VSL) - is not suitable and the benefit of cleaner air is thus measured by the value of additional life expectancy. Here the value of a change in life expectancy (LE) is obtained directly, using stated preferences. To elicit the WTP for reducing premature mortality, a contingent valuation (CV) survey was addressed to a sample of the Swiss population in autumn 2005. 192 questionnaires were administrated and 179 could finally be used for the WTP estimate and the internal validity test.

Respondents had to express their WTP for a 3 and 6 month gain in life expectancy due to stricter environmental regulation. The aim was to value the sole change in LE, other private (reduce morbidity risk) and public benefits (health of others, ecosystem) being excluded. The mean (monthly) WTP is CHF 57.7 (EUR 36.2) for a 6 months gain in LE and CHF 45.7 (EUR 28.7) for a 3 months gain. The WTP is not proportional to the gain in LE. This can be explained by the decreasing marginal utility of life gains and by the fact that respondents assessed not only change in LE, but also the improvement in health related quality of life. The VOLY estimate for Switzerland is comprised between CHF 50?000 (USD 45?500) and CHF 82?500 (USD 75?000).

Although the survey was designed to value only the change in LE and thus to exclude all other benefits linked to reduced air pollution (reduced morbidity, effects on ecosystems?), we realized that part of respondents valued a broader range of benefits. A similar observation was made in other European countries where the survey was conducted. Our findings highlight the difficulties in applying CV to value a specific part of a broader health change.