The Cost of Reduced Life Expectancy Due to Air Pollution: Assessing the Value of a Life Year (VOLY) Using Contingent Valuation

Abstract

Rationale: epidemiological studies suggest that air pollution causes a small loss in life expectancy (a few months with a large range from a few days to ten years) and this makes air pollution a very different case from the standard one (road accidents). For this reason, the appropriate parameter for estimating mortality cost linked to air pollution is VOLY (value of a life year) rather than VSL (value of a statistical life). Objectives: aim of the paper is to estimate the (monetary) value of a life year (VOLY) in the context of air pollution. Methodology: until recently the standard procedure to compute a VOLY was to extract it from an estimate of the value of a statistical life (VSL) assuming that VSL is the discounted sum of (annual) VOLYs. 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 conjoint 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. Results: the mean (monthly) WTP is equal to CHF 57.2 (EUR 35.9) for a 6 months gain in LE and CHF 47.9 (EUR 30) for a 3 month 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 of HRQOL (health related quality of life) when the air quality is improving. The VOLY estimate for Switzerland is comprised between CHF 46'230 (EUR 29'027) and CHF 86'025 (EUR 54'015). Conclusion: although the questionnaire 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 a significant 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 evaluate only a part of a global benefit.