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Report n°4: How Much to Spend for the Protection of Health and Environment

Outline of the Analysis

To calculate the benefits (= avoided damages) one needs to carry out an impact pathway analysis (IPA), tracing the passage of a pollutant from where it is emitted to the affected receptors (population, crops, forests, buildings, etc.). The principal steps of an IPA can be grouped as follows:

  • Emission: specification of the relevant technologies and pollutants, e. g. kg of NOx per GWh emitted by power plant);
  • Dispersion: calculation of increased pollutant concentrations in all affected regions, e. g. incremental concentration of ozone, using models of atmospheric dispersion and chemistry for ozone formation due to NOx (this step is also called environmental fate analysis, especially when it involves more complex pathways that pass through the food chain);
  • Impact: calculation of the dose from the increased concentration and calculation of impacts (damage in physical units) from this dose, using a dose-response function, e. g. cases of asthma due to this increase in ozone;
  • Cost: economic valuation of these impacts, e. g. multiplication by the cost of a case of asthma.

The impacts and costs are summed over all receptors of concern. The work involves a multidisciplinary system analysis, with inputs from engineers, dispersion modelers, epidemiologists, ecologists, and economists. The present paper is based on the results of the ExternE project series of the EC (in all phases of which the author has been a participant since 1992 and of which he coordinated the phase ExternE-Pol, 2002-2004). The result of an IPA is the damage cost per kg of emitted pollutant, as shown in Fig.5 of Section 3.4. The steps of the IPA are described in the following section.

The reader may wonder about the relation between an IPA and an environmental impact study (EIS) that is required before a proposed installation (factory, power plant, incinerator, ...) can be approved. The purpose of an EIS is to ensure that nobody is exposed to an unacceptable risk or burden. Since the highest exposures are imposed in the local zone, it is sufficient for an EIS to focus on a local analysis, up to perhaps ten km depending on the case. Thus an EIS provides the possibility of a veto if a proposed installation is considered unacceptable. By contrast the calculation of total damage costs requires an IPA where the damages are summed over all affected receptors (for most air pollutants emitted in Europe that is the entire continent, and for greenhouse gases it is the entire globe). Damage costs are needed primarily by decision makers at the national or international level, or generally by anyone concerned with total impacts.

For many environmental choices one needs to look not only at a particular source of pollutants, but has to take into account an entire process chain by means of a life cycle assessment (LCA). For example, a comparison of power generation technologies involves an analysis of the fuel chain sketched in Fig.1. Whether an IPA of a single source or an LCA of part or all of a chain is required, depends on the policy decision in question. For finding the optimal limit for the emission of NOx from an incinerator, an IPA is sufficient, but the choice between incineration and landfill of waste involves an LCA.

In principle the damages and costs for each pollution source in the life cycle should be evaluated by a site-specific IPA. But in practice almost all LCA has taken the shortcut of first summing the emissions over all stages and then multiplying the result by site-independent impact indices. Also, most practitioners of LCA reject the concept of monetary valuation, preferring instead to use about ten non-monetary indicators of "potential impact" that are based on expert judgment.