Benefits of Pollution Control
Analysis of Non-Market Values of Reducing Pollution as a Tool
Analysis of non-market benefits of pollution reduction can offer important contributions to the debate concerning costs related to pollution reduction.
Reducing exposure to environmental contaminates like carcinogens, heavy metals and pathogens, contributes to improved human heath. Conducting an analysis of these non-market benefits requires placing a value on them. Three different methods can determine these risk reductions, they are averting behavior, hedonic analysis and contingent valuation. The most common model of valuation is hedonic analysis.
Hedonic Analysis - Think of hedonic analysis as a percentage savings of a statistically significant lifespan. Mean value for a statistical lifespan can range from $1.6 million to $9.0 million in Canada, United States and Western Europe. The hedonic percentage equates to total lives saved in a population related to a reduction in pollution. Relating a value to this percentage produces a total cost attributable to the reduction in pollution. An example would be limiting a pollutant to reduce mortality by one percent. This equates to 1,000 individuals out of a population of 100,000. If it a society determines each life saved is worth paying another $1,000, then hedonic analysis would demonstrate a value of one million dollars to the pollutant reduction.
Contingent Valuation - This is a survey method that attempts to estimate the value people place on an item as it relates to some another factor. Pollution reduction associated with an apparent reduction of correlated symptoms is an example. Contingent valuation that reflects on the value of reduction associated with multiple symptoms shows the greatest promise of accurate estimates for the nonuse value of pollution reductions. This is in part due to the multiplier effect that occurs in addressing many individual symptoms.
Averting Behavior - This strategy estimates the value a person might put on an averting activity. An averting activity could be the use of an automotive seatbelt. A person could be persuaded to use a seatbelt, if they felt the marginal value of its use (and resulting safety improvement) is equal or greater than leaving it on the seat. Averting behavior can be measured in a digital manner, either yes or no.
Shortcomings of Non-Market Analysis - Many problems are associated with the use of indirect measurement of market values. These valuation methods are measuring general economic and social benefits of pollution reductions. Traditional measures of value focus on price and quantity. Use of non-market valuation can lead to arbitrary evaluations of potential benefits. Timing is also a major issue in any discussion of potential benefits from pollution reduction. There is often a latency period for the onset of disease after exposure to pollutants. These can be very difficult to quantify and include in an economic model.
Economists can offer important contributions to the debate concerning costs related to pollution reduction. They have already developed a strong body of knowledge related to valuation of a statistical lifespan and only need to refine the methods used to facilitate discussions of costs related pollution reduction.
