Environmental Project, 929 – Valuation of Chemical related Health Impacts - Estimation of direct and indirect costs for asthma bronchiale, headache, contact allergy, lung cancer and skin cancer

Valuation of Chemical related Health Impacts

3 Introduction

Economic assessment of environmental issues is a common used tool in the political environmental prioritisation process. Economic valuation of environmental and health related issues is one of the core inputs for such assessments.

In the area of chemical reduction, most economic assessments only consider the cost side of a reduction initiative (that is, cost effectiveness analysis). The reason for this is that the environmental and health effects are difficult to quantify and especially to translate into a value that can be compared with the costs.

Thus, an important step towards an improvement of economic assessment of chemical reduction initiatives will be to provide values for the benefits attained by reducing the exposure to chemicals.

The purpose of this study is to provide economic values for a selected number of chemical related health impacts. It is the intention that these values - or unit prices - can be used as input in economic assessment of various potential chemical reduction initiatives. It is important to stress that the main focus of this study is on:

Estimation of prices to be used when the number of diseases has been estimated;
Estimation of the direct costs (medicine, hospital care etc), while the welfare loss is not detailed assessed, just included for having the total price.

Below, the impact path is illustrated. This project only considers the price of given damages in terms of specific diseases. There is a lot complications attached to the estimation of the number of diseases, as the impact path from emission of chemicals to exposure to damages is characterised by complex interactions between many factors.

The values are to reflect the incremental price for the society following a certain health impact. This means that both direct and indirect cost related to the disease are included, although focus in the present study has been on the development of direct costs. Although the direct costs often accounts for a small share of the total costs, having a solid estimate of this element will be very useful. It reduces the total uncertainty about the valuation and it provides important information about the share of costs related to various public budgets.

Assessment of the welfare element is complicated and significant improvement would require quite comprehensive analysis which has been out of scope for this study. Instead, the welfare cost element has been based on existing data sources and it has been chosen to use the same values as used in a number of valuation studies commissioned by the Danish Ministry of Environment; thereby consistence is secured.

The elements included in the estimates are further described in Chapter 2 on valuation methodology.

Costs are reported in DKK as it is a Danish study. € 1 is equal to 7.44 DKK (2003). Furthermore, costs for each component are reported with accuracy of one DKK as they are used in subsequent calculations, despite the uncertainty level of the estimates. Finally, in Chapter 10, the uncertainty of the unit costs estimates is assessed.

Many sources have been used to compile the study. To the extent that international results have been used, their relevance in a Danish context has been evaluated. These evaluations have been made in cooperation with experts from each field of specialisation. The expert assessments are obtained from the persons listed in Appendix 2.

The present report documents the estimation of unit prices for five selected diseases: Asthma, headache, contact allergy, lung cancer and skin cancer. The diseases have been selected by DEPA and COWI in cooperation from the criteria of the relevance in relation to chemicals as well as the data availability. Chapter 2 describes the overall valuation methodology applied in the study. Next, each disease is considered separately in the chapters 3-7, including estimation of each cost component to be included in the unit cost estimate. Chapter 8 summarises the results, assesses the uncertainty of the estimates by providing high and low estimates and conclude on the findings. Along with this, it is illustrated how the estimates may be used in an economic assessment relation by an example of nickel allergy.