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Abstract:
We present results for two contingent valuation surveys conducted in Hamilton, Canada and the US to elicit WTP for mortality risk reductions. We find similar Value of Statistical Life estimates across the two studies, ranging from USD 930,000 to USD 4.8 million (2000 US dollars). WTP increases with risk reduction size, but varies little with respondent age: individuals aged over 70 years hold WTP values approximately one-third lower than other respondents. Respondent health status has limited effect on WTP. These results provide little or no evidence for adjusting VSL estimates used in policy analyses for the affected population's age or health status.

Value of a Statistical Life, Mortality Risks, Benefit-cost Analysis

Abstract:
We present the results of two contingent valuation surveys conducted in Hamilton, Canada and nation-wide in the US to elicit WTP for reductions in one's risk of death. We find that the Values of a Statistical Life implied by WTP are very similar across the two studies, and range from $930,000 to $4.8 million (2000 US dollars). WTP increases with the size of the risk reduction, but varies little with the age of the respondents: people older than 70 years of age hold WTP values that are about one-third lower than those of other respondents. This effect is significant in Canada but not in the US. Health status of the respondent has limited effect on WTP. In general, these results provide only little or no evidence that VSL used in environmental policy analyses should be adjusted for the age or health status of people whose lives are saved by environmental policies.

Value of a Statistical Life, mortality risks, benefit-cost analysis

Abstract:
Particulate air pollution has less overall impact on nontraumatic deaths in Delhi, India, than in U.S. cities. But the deaths occur earlier in life in Delhi, which could mean a larger loss in life-years.

Cropper, Simon, Alberini, and Sharma report the results of a time-series study of the impact of particulate air pollution on daily mortality in Delhi. They find:

A positive, significant relationship between particulate pollution and daily nontraumatic deaths as well as deaths from certain causes (respiratory and cardiovascular problems) and for certain age groups.

In general, these impacts are smaller than those estimated for other countries, where on average a 100-microgram increase in total suspended particulates (TSP) leads to a 6-percent increase in nontraumatic mortality. In Delhi, such an increase in TSP is associated with a 2.3-percent increase in deaths.

The differences in magnitudes of the effects are most likely explained by differences in distributions of age at death and cause of death, as most deaths in Delhi occur before the age of 65 and are not attributed to causes with a strong association with air pollution.

Although air pollution seems to have less impact on mortality counts in Delhi, the number of life-years saved per death avoided is greater in Delhi than in U.S. cities-because the age distribution of impacts in these two places varies. In the United States particulates have the greatest influence on daily deaths among persons 65 and older. In Delhi, they have the greatest impact in the 15-to-44 age group. That means that for each death associated with air pollution, on average more life-years would be saved in Delhi than in the United States.

Large differences in the magnitude of effects do call into question the validity of the concentration-response transfer procedure. In that procedure, concentration-response relationships found for industrial countries are applied to cities in developing countries with little or no adjustment, to estimate the effects of pollution on daily mortality.

This paper-a product of Development Economics Research Group-is part of a larger effort in the group to examine the benefits and costs of pollution control. The study was funded by the Bank's Research Support Budget under research project Measuring the Health Effects of Air Pollution in Developing Countries: The Case of Delhi, India (RPO 679-96). Maureen Cropper may be contacted at mcropper@worldbank.org.

Abstract:
Using results from two contingent valuation surveys conducted in Canada and the U.S., we explore the effect of a latency period on willingness to pay (WTP) for reduced mortality risk using both structural and reduced form approaches. We find that delaying the time at which the risk reduction occurs by 10 to 30 years reduces WTP by more than half for respondents in both samples aged 40 to 60 years. Additionally, we estimate implicit discount rates equal to 8% for Canada and 4.5% for the U.S. - both well within the range established previously in the literature.

Value of a statistical life, Mortality risks, Benefit-cost analysis

Abstract:
Conducting cost-benefit analyses of health and safety regulations requires placing a dollar value on reductions in health risks, including the risk of death. Compensating-wage differentials, which are often used to estimate the value of risk reductions, suggest that compensation for the loss of a statistical life in Indian manufacturing would be between 6.4 million and 15 million in 1990 rupees (roughly $150,000 to $360,000).

Conducting cost-benefit analyses of health and safety regulations requires placing a dollar value on reductions in health risks, including the risk of death. In the United States, mortality risks are often valued using compensating-wage differentials. These differentials measure what a worker would have to be paid to accept a small increase in his risk of death-which is assumed to equal what the worker would pay to achieve a small reduction in his risk of death.

Simon, Cropper, Alberini, and Arora estimate compensating-wage differentials for risk of fatal and nonfatal injuries in India's manufacturing industry. They estimate a hedonic wage equation using the most recent Occupational Wage Survey, supplemented by data on occupational injuries from the Indian Labour Yearbook.

Their estimates of compensating-wage differentials imply a value of statistical life (VSL) in India of 6.4 million to 15 million 1990 rupees (roughly $150,000 to $360,000 at current exchange rates). This number is between 20 and 48 times forgone earnings-the human capital measure of the value of reducing the risk of death.

The ratio of the VSL to forgone earnings implied by the study is larger than in comparable U.S. studies but smaller than the ratio implied by the only other compensating-wage study for India (Shanmugam 1997). The latter implies a ratio of VSL to forgone earnings of 73!

The authors caution that in India, as in the United States, compensating-wage differentials in the labor market may overstate what individuals would themselves pay to reduce the risk of death. They suggest using their estimates as an upper bound on willingness to pay to reduce risk of death, and forgone earnings as a lower bound.

This paper - a product of Infrastructure and Environment, Development Research Group - is part of a larger effort in the group to promote the use of benefit-cost analysis in evaluating environmental programs. The study was funded by the Bank's Research Support Budget under research project Valuing Mortality Reductions in India: A Study of Compensating Wage Differentials (RPO 680-84).

Abstract:
To quantify the health benefits of environmental policies, economists generally require estimates of the reduced probability of illness or death. For policies that reduce exposure to carcinogenic substances, these estimates traditionally have been obtained through the linear extrapolation of experimental dose-response data to low-exposure scenarios as described in the U.S. Environmental Protection Agency's Guidelines for Carcinogen Risk Assessment (1986). In response to evolving scientific knowledge, EPA proposed revisions to the Guidelines in 1996. Under the proposed revisions, dose-response relationships would not be estimated for carcinogens thought to exhibit nonlinear modes of action. Such a change in cancer-risk assessment methods and outputs will likely have serious consequences for how benefit-cost analyses of policies aimed at reducing cancer risks are conducted. Any tendency for reduced quantification of effects in environmental risk assessments, such as those contemplated in the revisions to EPA's cancer-risk assessment guidelines, impedes the ability of economic analysts to respond to increasing calls for benefit-cost analysis. This article examines the implications for benefit-cost analysis of carcinogenic exposures of the proposed changes to the and proposes an approach for bounding dose-response relationships when no biologically based models are available. In spite of the more limited quantitative information provided in a carcinogen risk assessment under the proposed revisions to the 1986 Guidelines, we argue that reasonable bounds on dose-response relationships can be estimated for low-level exposures to nonlinear carcinogens. This approach yields estimates of reduced illness for use in a benefit-cost analysis while incorporating evidence of nonlinearities in the dose-response relationship. As an illustration, the bounding approach is applied to the case of chloroform exposure.