Paper Number: EE-0271

Document Date: 02/01/1979

Author(s):  The University of Wyoming and Resources for the Future

Subject Area(s):  Economic Analysis, Air Quality, Benefits Analysis, Human Health Benefits, Ecological Benefits; Stated Preference Methods; Revealed Preference Methods; Cost of Damages Avoided; Hedonic Property Benefits Methods

Keywords: Economic Analysis, Air Quality, Benefits Analysis, Human Health Benefits, Ecological Benefits; Stated Preference Methods; Revealed Preference Methods; Cost of Damages Avoided; Hedonic Property Benefits Methods

Abstract: 

A series of reports were prepared under a grant awarded to the University of Wyoming for the U.S. Environmental Protection Agency focusing on estimating the benefits of air pollution control.  Most of the reports prepared under this grant are available for downloading, unless otherwise noted.

Volume I: Experiments in the Economics of Air Pollution Epidemiology.  This study employed the analytical and empirical methods of economics to develop hypotheses on disease etiologies and to value labor productivity and consumer losses due to air pollution-induced mortality and morbidity. Since the major focus is on methodological development and experimentation, all the reported empirical results are to be regarded as tentative and on-going rather than definitive and final. Two experiments were conducted. First, using aggregate data from sixty U.S. cities, 1970 city-wide mortality rates for major disease categories have been statistically associated with aggregate population characteristics such as physicians per capita, per capita cigarette consumption, dietary habits, air pollution and other factors. The second experiment, which focused on morbidity, employed data on the generalized health states and the time and budget allocations of a nationwide sample of individual heads of household.  (Authors: Crocker, Thomas D.; Ben-David, Shaul ; Kneese, Allen V.; Schulze, William D.)

Volume II.  Experiments in Valuing Non-Market Goods: A Case Study of Alternative Benefit Measures of Air Pollution Control in the South Coast Air Basin of Southern California. This 1979 study on the economic benefits of air pollution control includes the empirical results obtained from two experiments to measure the health and aesthetic benefits of air pollution control in the South Coast Air Basin of Southern California. Each experiment involved the same six neighborhood pairs, where the pairings were made on the basis of similarities in housing characteristics, socio-economic factors, distances to beaches and services, average temperatures, and subjective indicators of housing quality. The elements of each pair differed substantially only in terms of air quality. Data on actual residential property transactions and on stated preferences in air quality were collected.  The results indicate that air quality deterioration in the Los Angeles area has had substantial negative effects on housing prices and that these effects are comparable in magnitude to what people say they are willing to pay for improved air quality.  (Authors: Brookshire, David S.; d'Arge, Ralph C.; Schulze, William D.; Thayer, Mark A.)

Volume III.  A Preliminary Assessment of Air Pollution Damages for Selected Crops Within Southern California This study investigates the economic benefits that would accrue from reductions in oxidant/ozone air pollution-induced damages to 14 annual vegetable and field crops in southern California. Southern California production of many of these crops constitutes the bulk of national production. Using the analytical perspective of economics, the study provides a review of the literature on the physical and economic damages to agricultural crops from air pollution. In addition, methodologies are developed permitting estimation of the impact of air pollution-induced price effects, input and output substitution effects, and risk effects upon producer and consumer losses. Estimates of the extent to which price effects contribute to consumer losses are provided. . (Authors:  Adams, Richard M.; Crocker, Thomas D.; Thanavibulchai, Narongsakdi)

Volume IV.  Studies on Partial Equilibrium Approaches to Valuation of Environmental Amenities, The volume includes two theoretical papers and two empirical papers which provide important qualification and extensions to the results described in earlier volumes. Previous volumes described experiments that were conducted in a partial equilibrium context. In the first paper (Chapter 2), W.R. Porter discusses the adjustments and changes in underlying assumptions that are required at a theoretical level to obtain the valuations in a general equilibrium context. In Chapter 3, Robert Jones and John Riley then discuss the effects on the valuations determined in a partial equilibrium context when consumers are uncertain about the health hazards associated with consumption. In Chapter 5, M.L. Cropper describes the results of a model of the variations in wages for assorted occupations across cities that is designed to establish an estimate of willingness to pay for environmental amenities. She finds that the valuation obtained from this model (of a general equilibrium context) accords closely with the valuations reported from the experiments in previous volumes. Finally, in Chapter 5, W.R. Porter and B.J. Hansen suggest some improvements in techniques used in the earlier experiments. They describe the results of an experiment they conducted to test a new method for removing the biases in bidding procedures designed to elicit one's true valuations for a public good.. (Authors: Cropper, Maureen L.; Porter, William R.; Hansen, Berton J.; Jones, Robert A.; Riley, John G.)

Volume V. Executive Summary  The studies summarized by this volume represent original efforts to construct both a conceptually consistent and empirically verifiable set of methods for assessing environmental quality improvement benefits. While the state-of-the-art does not at present allow us to provide highly accurate estimates of the benefits of reduced human or plant exposure to air pollutants, these studies nevertheless provide a set of fundamental benchmarks on which further efforts might be built. These are: 1) many benefits traditionally viewed as intangible and therefore non-measurable can, in fact, be measured and be made comparable to economic values as expressed in markets; 2) aesthetic and morbidity effects may dominate the measure of benefits as opposed to previous emphases on mortality health effects; and 3) the likely economic benefits of air quality improvements are perhaps as much as an order of magnitude greater than previous studies had hypothesized. (Authors: Crocker, Thomas D.; Brookshire, David S.; d'Arge, Ralph C.; Ben-David, Shaul; Kneese, Allen V. Schulze, William D.)

These papers are part of the  Environmental Economics Research Inventory.

• Methods Development for Assessing Air Pollution Control Benefits. Volume I. Experiments in the Economics of Air Pollution Epidemiology (1979) (PDF)(163 pp, 3 MB, 02/01/1979, EE-0271A, EPA-600/5-79-001a)
  This study employed the analytical and empirical methods of economics to develop hypotheses on disease etiologies and to value labor productivity and consumer losses due to air pollution-induced mortality and morbidity. Since the major focus is on methodological development and experimentation, all the reported empirical results are to be regarded as tentative and on-going rather than definitive and final.
• Methods Development for Assessing Air Pollution Control Benefits. Volume II. Experiments in Valuing Non-Market Goods: A Case Study of Alternative Benefit Measures of Air Pollution Control in the South Coast Air Basin of Southern California (1979) (PDF)(221 pp, 7 MB, 02/01/1979, EE-0271B, EPA-600/5-79-001b)
  Study on economic benefits of air pollution control includes the empirical results obtained from two experiments to measure the health and aesthetic benefits of air pollution control in the South Coast Air Basin of Southern California. Each experiment involved the same six neighborhood pairs, where the pairings were made on the basis of similarities in housing characteristics,socio-economic factors,distances to beaches and services,average temperatures,and subjective housing quality indicators.
• Methods Development for Assessing Air Pollution Control Benefits. Volume III. A Preliminary Assessment of Air Pollution Damages for Selected Crops Within Southern California (1979) (PDF)(99 pp, 1 MB, 02/01/1979, EE-0271C, EPA-600/5-79-001c)
  This study investigates the economic benefits that would accrue from reductions in oxidant/ozone air pollution-induced damages to 14 annual vegetable and field crops in southern California. Southern California production of many of these crops constitutes the bulk of national production. Using the analytical perspective of economics, the study provides a review of the literature on the physical and economic damages to agricultural crops from air pollution.
• Methods Development for Assessing Air Pollution Control Benefits, Volume IV Studies on Partial Equilibrium Approaches to Valuation of Environmental Amenities (1979) (PDF)(93 pp, 907 K, 02/01/1979, EE-0271D; EPA-600/5-79-001d)
  Th first paper discusses the adjustments and changes in underlying assumptions that are required at a theoretical level to obtain the valuations in a general equilibrium context. Chapter 3 discusses the effects on the valuations determined in a partial equilibrium context when consumers are uncertain about the health hazards associated with consumption. Chapter 5 describes the results of a model of the variations in wages for assorted occupations. Chapter 5 suggests improvements in techniques
• Methods Development for Assessing Air Pollution Control Benefits. Volume V. Executive Summary (1979) (PDF)(23 pp, 136 K, 02/10/2979, EE-0271E, EPA 600/5-79-001e)
  The studies summarized by this volume represent original efforts to construct both a conceptually consistent and empirically verifiable set of methods for assessing environmental quality improvement benefits.