Paper Number: EE-0563

Document Date: 12/10/2010

Author(s): U.S. Environmental Protection Agency, National Center for Environmental Economics

Subject Area(s):

Benefits Analysis, Valuation, Mortality Risks

Keywords:  Value of Statistical Life, Benefits Analysis, Valuation, Mortality Risk Reduction

Abstract: 

The valuation of human health benefits is often a crucial, but sometimes controversial, aspect of the application of benefit-cost analysis to environmental policies. Valuing the reduced risks of mortality, in particular, poses a special set of conceptual, analytical, ethical and empirical challenges for economists and policy analysts. This white paper addresses current and recent U.S. Environmental Protection Agency (EPA) practices regarding the valuation of mortality risk reductions, focusing especially on empirical estimates of the “value of a statistical life” (VSL) from stated preference and hedonic wage studies and how they might be summarized and applied to new policy cases using some form of benefit transfer. Benefit transfer concepts will be highlighted throughout the paper, since any application of existing empirical estimates of values for health risk reductions to new policy cases is inherently a benefit transfer problem.　

The main intended audience for this paper is EPA’s Science Advisory Board-Environmental Economics Advisory Committee (EEAC). The main objectives of the paper are to highlight some key topics related to the valuation of mortality risks, and to describe several possible approaches for synthesizing the empirical estimates of values for mortality risk reductions from existing hedonic wage and stated preference studies for the purpose of valuing mortality risk reductions associated with future EPA policies. Some of these approaches could be implemented in the short term, but others will likely require longer term research. We are soliciting general feedback and specific recommendations from the SAB-EEAC on each of these key topics and approaches.

This paper is part of the  Environmental Economics Research Inventory.

• Valuing Mortality Risk Reductions for Environmental Policy: A White Paper (PDF)(95 pp, 2 MB, 12/10/2010, EE-0563)
  The valuation of human health benefits is often a crucial, but sometimes controversial, aspect of the application of benefit-cost analysis to environmental policies. Valuing the reduced risks of mortality, in particular, poses a special set of conceptual, analytical, ethical and empirical challenges for economists and policy analysts. This white paper addresses current and recent U.S. Environmental Protection Agency (EPA) practices regarding the valuation of mortality risk reductions.