1 El costo del status quo: Valoración económica del costo social de la contaminación atmosférica en ciudades latinoamericanas Luis A. Cifuentes Center for the Environment and Industrial Engineering Dept School of Engineering P. Universidad Católica de Chile Sesión 3: Política Fiscal y Medio Ambiente CEPAL, Santiago de Chile, 31 de enero de 2007

Contenido 1.Introducción a la valoración económica de los impactos de la contaminación atmosférica 1. Método de la función de daño 2. Requerimientos de Información - Aplicabilidad en países en desarrollo 2.Valoración económica del impacto por contaminación aérea en ciudades latinoamericanas. 1. Estimación de la perdida económica y de bienestar resultante de los actuales niveles de contaminación en 39 ciudades la Latinoamérica 3.Costos en salud evitados en Santiago de Chile debido al proceso de descontaminación iniciado en  Costos económicos evitados por el Plan de Descontaminación  Comparación con Costo de las medidas de reducción de emisiones 2

Parte 1 3

Introducción a la valoración económica de los impactos de la contaminación atmosférica 1. Fundamentos 2. Método de la función de daño 3. Requerimientos de Información 4

5 Efectos de la contaminación atmosférica Efectos en la salud de la población Efectos en vegetacion y cultivos Efectos en materiales Efectos estéticos (visibilidad)

6 Efectos en Materiales German Ornamental Figure, 1908 (left) and 1968 (right), Herten Castle, Germany. Source: Westfalisches Amt Fur denkmalpflege, Munster)

7 Efectos en vegetación Daño a bosques en Alemania Baja de productivida d de cosechas

8 Visibilidad: Ciudad de México

Efectos en Salud… 9 La primera pregunta que nos debemos hacer es: ¿puede la contaminación atmosférica tener un impacto negativo en la salud de la población?

10 Key Issues Are there health effects of current levels of air pollution? Are there health effects of air pollution in Latin America and the Caribbean? What are these effects? How much does the population values the ocurrence of these effects

11 Health Effects of Air Pollution There is no doubt that air pollution adversely affects human health. From the 1970’s, epidemiologic studies have consistently shown an association of air pollution levels and the incidence of health effects, from simple nuisances to premature mortality. Research conducted in LAC has also shown that current levels of AP do have an effect on the health of the population

12 Londres, Invierno 1953 Mortalidad Semanal vs. Concentraciones de SO 2 Fuente: Bell, M. L. and D. L. Davis (2001). “Reassessment of the lethal London fog of 1952: novel indicators of acute and chronic consequences of acute exposure to air pollution.” Environ Health Perspect 109 Suppl 3:

13 London Killer Smog

14 SO 4 and mortality rates in USA in 1980 Source: Ozkaynak, H. and G. D. Thurston (1987). “Associations Between 1980 U.S. Mortality Rates and Alternative Measures of Airborne Particle Concentration.” Risk Analysis 7(4): SO2 NAAQS Annual Avg: 80 ug/m3

15 Long term study: Pope et al, 2002 DESIGN, SETTING, AND PARTICIPANTS  Vital status and cause of death data collected by the American Cancer Society as part of the Cancer Prevention II study, for 1.2 million adults in  Participants completed a questionnaire detailing individual risk factor data (age, sex, race, weight, height, smoking history, education, marital status, diet, alcohol consumption, and occupational exposures).  The risk factor data for approximately adults were linked with air pollution data for metropolitan areas throughout the United States and combined with vital status and cause of death data through December 31, 1998 RESULTS:  Fine particulate and sulfur oxide--related pollution were associated with all-cause, lung cancer, and cardiopulmonary mortality.  Each 10-ug/m3 of PM2.5 associated with approximately a 4%, 6%, and 8% increased risk of all-cause, cardiopulmonary, and lung cancer mortality, respectively.  Measures of coarse particle fraction and total suspended particles were not consistently associated with mortality. CONCLUSION:  Long-term exposure to combustion-related fine particulate air pollution is an important environmental risk factor for cardiopulmonary and lung cancer mortality.

16 Chronic Effects: All Cause Mortality Source: Pope III, C. A., R. T. Burnett, M. J. Thun, E. E. Calle, D. Krewski, K. Ito and G. D. Thurston (2002). “Lung cancer, cardiopulmonary mortality, and long-term exposure to fine particulate air pollution.” Jama 287(9): PM2.5 NAAQS Annual Avg: 15 ug/m3

17 Chronic Effects: All Cause Mortality Extrapolation to Santiago Source: Pope III, C. A., R. T. Burnett, M. J. Thun, E. E. Calle, D. Krewski, K. Ito and G. D. Thurston (2002). “Lung cancer, cardiopulmonary mortality, and long-term exposure to fine particulate air pollution.” Jama 287(9): Santiago Promedio Santiago 2001 Rango de estudio en EE.UU Promedio Anual de PM2.5 [ug/m3]

18 Santiago 1991

19 Efectos cuantificables y no cuantificables Source: Cifuentes, L., V. H. Borja-Aburto, Nelson Gouveia, George Thurston, Devra Lee Davis (2001). “Assessing The Health Benefits of Urban Air Pollution Reductions Associated With Climate Change Mitigation : Santiago, São Paulo, Mexico City, and New York City.” Environmental Health Perspectives, June Adapted from EPA. The Benefits and Costs of the Clean Air Act, 1990 to 2010 EPA-410-R : U.S. Environmental Protection Agency, 1999.

¿ Cómo estimar el impacto de la CA? 20

21 Método de la Función de Daño

Requerimientos de Informacion Modelo de calidad del aire  Monitoreo ambiental  Inventarios de emisiones Impacto en salud  Demografía  Estadísticas de salud de la población  Funciones Concentración-Respuesta Valoración de los efectos  Costos médicos  Costos de productividad Perdida  Disposición a pagar Integración de los resultados 22

Parte 2 23

Valoración económica del impacto por contaminación aérea en ciudades latinoamericanas. Estimación de la perdida económica y de bienestar resultante de los actuales niveles de contaminación en 40 ciudades la Latinoamérica (Trabajo realizado para el BID: Cifuentes, L. A., A. Krupnick, R. O'Ryan and M. Toman(2005). Urban Air Quality And Human Health In Latin America And The Caribbean. Washington, DC., Interamerican Development Bank. Disponible en 24

Abstract Recent estimates indicate that over 100 million people in Latin America and the Caribbean are exposed to air pollution levels exceeding World Health Organization guidelines. Despite progress in dealing with this problem, however, the level of knowledge about air pollution's impact on health and the economy is limited in much of the LAC region. This study assesses the potential benefits of improving air quality in 41 major LAC urban areas containing 100 million people in all. Our analysis indicates that 26 cities in our sample, containing 85 million people (of which 28 million are children less than 18 years of age), are exposed to particulate concentrations above internationally accepted levels. Reducing concentrations to the level of the standard could avoid on the order of 10,000 to 13,000 premature deaths (more than 2% of total deaths per annum), as well as well a host of illness related problems. Several billion dollars in direct cost savings each year might be realized for the affected populations. Including indirect as well as direct losses of economic well-being from air pollution raises the potential benefit substantially. Such figures could justify significant investments in pollution control as a form of public health protection. This working paper is being published with the objective of contributing to the debate on a topic of importance to the region, and to elicit comments and suggestions from interested parties. This paper has not undergone consideration by the SDS Management Team. As such, it does not reflect the official position of the Inter-American Development Bank. 25

26 Epidemiologic studies of air pollution and health effects in Latin America and the Caribbean. Source: An Assessment of Health Effects of Ambient Air Pollution in Latin America and the Caribbean, Working Draft, November 2004, Area of Sustainable Development and Environmental Health, Pan American Health Organization, World Health Organization Effects studied include Premature Mortality Hospital admissions Emergency Room Visits Child Medical Visits

27 Health Effects considered:

28 Risk coefficients considered

29 Short-term All Cause Mortality Studies in Latin America

30 Valuation of the Health Effects There are three components of the social value assigned to each health effect avoided: 1. Medical treatment: costs of the actual effect (for example, the cost of a visit to the emergency room) 2. Lost Productivity : the value of the labor lost due to the incidence of the health effect (e.g., while in the hospital and while recovering, work is missed) 3. Disutility: the direct welfare loss associated to the health effects (e.g the nuisance of experience an asthma attack) The first two components can be estimated directly, and are referred to as the Cost of Illness (COI) For disutility values, the method of choice is Contingent Valuation. There are very few CV studies in LAC.

31 Transference of Unit Values If not local values are available, they can be transferred from other countries, using ratio of per-capita income: Income elasticity: can vary from 0.4 to 1. If 0.4, values are less sensitive to income differences. Purchase Power Parity (PPP) can also be used. The difference between countries will be smaller.

32 Values used For this work, we considered medical costs values from Mexico and Chile, and Willingness to Pay values from Chile transferred to all countries. We also used willingness to pay values from the USA transferred to all countries. There is a big difference of the two source of values: For example, the Value of a Statistical Life (VOSL) from the Chilean study is $634 thousand, while the VOSL from the USA studies in $6.3 million.

Medical Unit Costs (US$ per case) Medical costs were transferred to other cities using the ratio of GNP in PPP terms 33

34 Value of Statistical Life 1000 US$/case

35 Morbidity WTP Values – Example (US$ per case)

36 Ambient Pollutant Concentrations Data for 39 LAC cities was gathered from different sources: state-run monitoring networks, research monitors, etc. The quality of data was an issue: we separated the ‘good’ quality cities from the not so good, or unknown quality. Analyses scenarios: We analyzed two control scenarios:  C1: a uniform 10% reduction in actual levels  C2: the attainment of a 50 ug/m3 reference level (this level is similar to many countries annual standards. New WHO guidelines are 40–20 ug/m3)

37 PM 10 annual concentrations

38 Population exposure to PM10

39 Results

Reduction in Mortality and Morbidity (cases per year) 40

41 Annual Benefits by Scenario ( MUS$/year) COI includes medical costs and lost productivity

42 Per Capita Benefits (US$/person/yr)

43 Benefits as % of income for a 10% reduction in PM 10 levels A 10% reduction in PM10 levels results in considerable benefits as % of income. The differences stem from different actual levels, and from mortality rates.

44 Total benefits for a unit reduction Millions of US$ per ug/m3 reduced Reducing PM10 annual levels by 1 ug/m3 results in benefits from a few million dollars for some cities to up to 500 million dollars for Mexico City

Summary This analysis shows that there is a significant benefit to be accrued if ambient concentrations of PM are reduced, i.e. there is a significant damage being done now! Although the biggest figures are for lost of welfare (expressed as willingness to pay measures), the cost of illness figures are important For the scenario in which the annual PM standars are met, the benefits amount to up tp 83 US$/person per year (For Santiago, is 49 US/person, for Ciudad Juarez, Mexico, 97 US$/person). These are significant numbers. 45

46 Conclusions This analysis shows that the impact of air pollution in Latin America is significant. The estimated number of premature deaths, for not complying with the PM standard, can go from 4 to 13 thousand per year (considering only 100 M people in urban centers) The benefits of complying with the standards can go from 0.1 to 1.7% of the gross product of the 39 cities analyzed, only for medical and lost productivity costs. This figure jumps to 1.4 to 18.1% when willingness to pay values are considered.

Costos en salud evitados en Santiago de Chile debido al proceso de descontaminación iniciado en Costos económicos evitados por el Plan de Descontaminación Comparación con Costo de las medidas de reducción de emisiones 47

Puntos Principales Monitoreo de PM2.5 permite centrarse en la fraccion fina del material particulado, que es la mas peligrosa. Estudios epidemiológicos realizados en Santiago brindan una mayor confianza a los resultados, y ayudan a sobreponerse al síndrome ‘esto no le ocurre a nuestra población’ Datos detallados de atenciones de salud nos permiten asignar los costos a los diferentes agentes: estado, población, sector privado Desarrollo de inventarios de emisiones permite, en forma aproximada, estimar el impacto de reducciones en emisiones en la calidad ambiental, y por ende, cuantificar los beneficios de estas reducciones, y realizar un análisis costo beneficio para las medidas de mitigación. 48

49 Relación Emisiones-Concentración PM2.5 El impacto de las emisiones de contaminantes primarios en el material particulado fino es muy diferente. Se usaron modelos roll-back con elasticidad menor que 1 para relacionar las emisiones con la fracción del PM2.5 correspondiente a cada contaminante (usando la asignación de CONAMA 2000) Donde C es la concentración de la fracción de PM2.5 asignada a cada contaminante primario No se considera explícitamente la existencia de un nivel background. Parte de ese efecto esta captado por la elasticidad menor que 1. Se consideró que 1/3 del Carbón orgánico proviene de compuestos orgánicos volátiles. E C Eo Co

50 Mortalidad Diaria según Tamaño de Partícula Fuente: Cifuentes, L., J. Vega, K. Kopfer and L. Lave (2000). “Effect of the fine fraction of particulate matter vs the coarse mass and other pollutants on daily mortality in Santiago, Chile.” Journal of the Air & Waste Management Association 50(August):

51 Pneumonia Emergency Room Visits from Children in Santiago, Chile Source: Illabaca, M., I. Olaeta, E. Campos, J. Villaire, M. M. Tellez and I. Romieu (1999). “Association between Levels of Fine Particulate and Emergency Visits for Pneumonia and other Respiratory Illnesses among Children in Santiago, Chile.” Journal of the Air & Waste Management Association 49:

52 Disposición a Pagar por Reducción de Riesgos de Muerte La reducción de riesgos de muerte es el efecto más importante. Se han considerado dos fuentes:  Valores para EE.UU transferidos a Chile usando la razón entre ingreso per capita y paridad de poder de compra  Valores obtenidos directamente de un estudio de Valoración Contingente en Santiago. Estos últimos valores se ajustaron al ingreso nacional usando una elasticidad ingreso de  Se usó el promedio de los valores más bajos de ambos conjuntos de valores Fuentes: EPA (1999). The Benefits and Costs of the Clean Air Act, 1990 to 2010, U.S. Environmental Protection Agency. Cifuentes, L., J. J. Prieto and J. Escobari (2000). Valuation of mortality risk reductions at present and at an advanced age: Preliminary results from a contingent valuation study. Tenth Annual Conference of the European Association of Environmental and Resource Economists, Crete, Greece.

53 Excess effects in Santiago for year 2000 Effects computed for the whole population in Santiago, 4.8M people, for a change in PM2.5 concentrations from the current 35.1 ug/m3 to a reference level of 15 ug/m3 (the US standard). Chronic effects computed for a change from 52.5 to 15 ug/m2 of the long term average concentrations.

54 Quien recibe los beneficios? Usando la adscripción de la población a los diferentes sistemas de salud (publico, privado e independientes), y su empleador (que es responsable del pago de las licencias medicas), pudimos asignar los beneficios a cada sector:

55 Benefits for the 1997 Santiago Decontamination Plan In 1997 a Atmospheric Decontamination and Prevention Plan (PPDA) was signed into law. The Plan The Plan calls for a gradual reductions in AP concentrations, aiming to comply with the current Chilean PM10 and ozone standards in a 15 year time frame. The baseline conditions assume an increase in concentrations due to increase in population and in economic conditions

56 Evolución de Contaminacion y PIB per capita Region Metropolitana Indice 1989=1

57 Number of cases avoided by the Decontamination Plan Total number of cases accrued from 1997 to 2011, if the reduction in concentrations is achieved.

58 Beneficios en Salud del PPDA (Mill. US$ de 2000) Millones de dólares del 2000

59 Razón Beneficio/Costo para medidas de reducción Razón calculada como el Valor Presente de los beneficios sobre el valor presente de los costos, durante toda la vida útil de la medida, usando una tasa de descuento social del 12%. Beneficios bajos calculados considerando solo muertes de corta exposición. Beneficios altos incluye muertes debido a exposición prolongada. El beneficio incluye el beneficio de las reducciones de PM2.5 y de ozono. No se han valorado las reducciones de CO2.

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