Value of a Statistical Life

How Should the World Bank Estimate Air Pollution Damages?

Sep 12, 2014 | Maureen L. Cropper, Shefali Khanna

One of the indicators the World Bank uses to measure the sustainability of a country’s growth is adjusted net savings (ANS), which includes an estimate of the costs of health damages from exposure to outdoor air pollution. This pollution damage indicator is published annually in the World Development Indicators, together with estimates of annual average PM10 (particulate matter less than 10 microns in diameter) in cities of 100,000 or more. Estimates of health damages associated with PM10 exposure are the monetized value of Disability-Adjusted Life Years (DALYs) associated with PM10 exposure in these cities, expressed as a percent of each country’s gross national income (GNI).

In a new RFF discussion paper, commissioned by the World Bank, we review the current methodology for estimating the cost of air pollution damages and identify better data sources to enable more accurate estimates of pollution exposure and health costs. We note two shortcomings to the current approach to modeling exposure to outdoor air pollution. The first problem is that current estimates ignore the approximately 5 billion people who live outside cities of 100,000 or more. Although, historically, outdoor air pollution has been considered an urban problem, a comparison of the 2010 Global Burden of Disease (GBD) and World Bank estimates suggests that half of deaths due to outdoor air pollution occur in rural areas.

Another problem with the current approach is that the estimates for urban PM10 come from an econometric model (GMAPS) that estimates PM10 concentrations at the city level using data on fuel consumption at the country level. For African countries, some of the model’s predictions are dubious: for example, Botswana is estimated to be the second most polluted country in the world, and urban areas in Senegal and Zimbabwe are estimated to have higher concentrations of particulate matter than urban areas in China.

Using estimates of population exposures to outdoor air pollution produced by the GBD team at the Institute for Health Metrics and Evaluation (IHME), together with GBD estimates of DALYs associated with PM exposure would be an improvement over the current approach. The GBD combines satellite data with chemical transport models to provide global estimates of fine particle (PM2.5) exposure at a 10km by 10km resolution. GBD estimates of health effects are produced for exposure to ozone as well as PM2.5.  These estimates represent the state of the art in both exposure measurement and epidemiology.

The World Bank’s approach to valuing these health impacts is basically sound.  In our paper, we discuss the strengths and limitations of the World Bank’s approach to the valuation of health risks. Read on in the full paper for more more information.