Valuing Reduced Morbidity:A Case Study of the Persian Gulf Environmental Damages

GEF

Session 9B

Valuing Reduced Morbidity:A Case Study of the Persian Gulf

Environmental Damages

Morteza Rahmatian

California State University, Fullerton

[email protected]

Ashgabad, November, 2005

Caspian EVE 2005/UNDP and WBI Morteza Rahmatian, Valuing Morbidity

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During the 1991 Gulf War, 700 oil wells were set on fire by Iraq’s troops.

These fires burned for 10 months creating the most disastrous environmental problem ever recorded.

The propose of this report is to estimate the health effects from the air pollution caused by this disaster.

Contingent Valuation Method (CVM) is employed to estimate the monetary values.


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• Based on our experience with focus groups and pre-testing, we chose to target valuing seven symptoms: coughing spells, shortness of breath, eye irritation, sore throat, headache, chest pain and asthma.

• Values presented here are “one-day” willingness to pay (WTP) estimates for one less day of symptom occurrence.

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The Utility Model

U = U(X, L, I, N; Z) Where:

X: Consumption goods

L: Leisure

I: Illness adjusted for its severity

N: Nature of illness

Z: Vector of individual characteristics

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The Utility Model

I = (D)(S) where:

D: is the disutility from illness.

S: is the severity of the illness.

Z: is a vector of individual characteristics such as health history, age, etc.


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The Utility Model

I = (D)(S)

I(P, N, M, E) = [D(P, N, E)][S(M, E)]

P: Air pollution

N: Nature of the illness

E: Severity of air pollution

M: Mitigating behavior (i.e. Medication)


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The Utility ModelIndividuals’ Utility maximization subject to theBudget Constraint:

Y + W(T – L – I) = PX X + PM M Where

Y; Non-wage incomeW; Real wage rateT; Total timeP; Price


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The Utility Model

Willingness to pay for a change in D necessary to achieve U0 at the original duration of illness, D0, minus the expenditure necessary to achieve U0 at the new (lower) duration of illness D1:

WTP = E(PX, PM, Y, W, N, S, Z, D0, U0) - E(PX, PM, Y, W, N, S, Z, D1, U0)


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The Data and Health Impact Valuation

Residents of Busheher and Hormozghan were surveyed.

First, respondent’s health background and the frequency of which they experienced any of the health symptoms.

Second, Maximum Willingness to Pay, per symptom avoided, per day was asked

Third, socio-economic questions was asked


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Number of observation 200 Smokers 37%Sports 46%Diet 53% Male 59%Female 51%Age 34.26 YearsEducation 14.31 Years Household size 3.92 Head of household 55%Average income 903,580 Rials


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Symptoms Mean Value Median

Cough per day 18,390 12,000Shortness of breath 21,800 17,500Eye irritation 16,050 11,000Sore throat 20,540 10,000Headache 32,370 20,000Chest pain 31,020 20,000Asthma Attack 40,510 30,000


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Due to large discrepancy between mean and medium avoidance bids, median bids were bids were used in this study.

Majority of the indicated socio-economic variables displayed the expected relationship with bids providing for the survey instrument used in this report.


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Population at Risk

This report attempts to place a monetary

value on avoiding seven health

symptoms, which restricts daily activities.

Many other elements are missing such

as, loss of human life, pain and suffering,

ecological degradation,…….


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Population at Risk

To estimate the health effects of the pollutants due to impact of the Gulf War, the followingsteps were taken:

1. An estimate of an exposure-response and or dose-response function specific to the local pollutant mix was derived.

2. Age and gender distributions were obtained through Iran’s national statistics to estimate the total population at risk


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Population at Risk

3. Time-activity profiles for the population is used to determine the percentage of time the specific population spends outdoors relative to the time spent indoors.

4. Ambient air quality data for all pollutants of interest needs to be collected.

5. An emission source inventory is identified. Here, the inventory source of pollution was the 700 oil wells set on fire.


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Population at Risk

Total population exposed in the 8 counties

under study is:

Male Female Total

7,636,464 7,179,951 14,816,415

Male Female

Outdoor 3,619,684 299,490

Indoor 4,016,780 6,880,461


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Dose response functionNumber of symptom per month

Symptoms Mean Median Ad. Median

Cough 12.55 13 9Sh. of breath 9.98 10 7Eye irritation 8.66 8 5Sore throat 5.71 5 4Headache 13.72 15 12Chest pain 1.63 0 0Asthma Att. 0.38 0 0


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Dose response function

Nearly 45% of the population was exposed to

levels of pollution above the first stage alert levels

The relationship between air quality, the amount

of pollution, the health effects of breathing the

pollution, and the economic benefits of preventing

those effects is quantified


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Sensitive Population in the Southern Part of Iran

Infants and the elderly experienced the lowest

exposures per capita because they spent less

time outdoors.

School age children, college students, and adults

experienced the highest exposure per capita.

This group constitute 28% of the population, yet

they experienced 40% of the symptoms.


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WTP Adjustment Function

The value placed on, the first day of reduced

symptoms would not be expected to be the

same as that for the tenth day due to simple

economic theory of diminishing marginal

utility.

WTP to reduce N days of a symptom is

significantly less than N times the WTP to reduce

1 day of a symptom.


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Adjusted WTP for Multiple Days of Symptom

# Days reduced All Days ValuedAdj. WTP Mult Factor 11 1,000 1,000 1.002 2,000 1,410 0.7053 3,000 1,700 0.5664 4,000 1,990 0.4975 5,000 2,240 0.4486 6,000 2,490 0.4157 7,000 2,690 0.3848 8,000 2,870 0.3589 9,000 3,030 0.33610 1,0000 3,160 0.316


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To estimate the indoor/outdoor total economic values (Cough for example), the outdoor population, the frequencies of symptoms (9), the unit values (WTP = 12,000), and the multiple days adjusting factors were utilized (0.336).

Outdoor Total Value = 768,000,000,000Indoor Total Value = 1,620,000,000,000


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Indoor Outdoor

The main distinction between indoor

and outdoor is the fact that for the

indoor population the frequencies of

symptom occurrence adjusted by the

0.625 indoor - outdoor factor.


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Overall ValuationThe bids offered for five symptom combinations

(cough, shortness of breath, eye irritation, sore

throat and headache) is valued at 55% of the

summed symptoms separately because of the

diminishing marginal utility. Note that chest pain

and asthma attacks were eliminated from the

analysis due to zero median frequencies for the

period in question.


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Overall Valuation

The total population at risk was estimated at

45% of the general population. This is based on

population density, distance to the source of

pollution, spatial distribution, the unemployment

rate and population concentration in villages vs.

major metropolitan areas.


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Overall Valuation

Thus the final monetary value assigned forreducing pollution must be adjusted twice. Once by 55% for multiple symptom daysand the second time by 45% to capture thegeneral population at risk from such pollution.Therefore, the total adjusting factor:

0.2475 = [(0.55)(0.45)]


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Overall Valuation

1.The final adjusting factor for the general population at risk is:

(Multiple Symptom Factor)(Percent

Population Exposed) = Adjusting Factor

(55%)(45%) = 0.2475


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Overall Valuation

2. The final monthly monetary is:

(Total Monthly Value)(Adjusting Factor) = Final Monthly Value

(2,380,000,000,000)(0.2475) = 590,000,000,000 Rials


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Overall Valuation

3. Using the exchange rate of $1 = 8,000

Rials, this total monthly value can be

exchanged into Dollars.

(Final Monthly Value)(Exchange Rate) = Final

Value in Dollars

(590,000,000,000)(1/8000) = $73,750,000


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Overall Valuation

Thus an average of 5 months is used to compute

the total value lost in health benefits

(Final Monthly Value)(5 Months) = Total Value Lost

(590,000,000,000)(5) = 2,950,000,000,000 Rials

The same value presented in Dollars is,

($73,750,000)(5) = $ 368,750,000


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Overall Valuation

These estimates are the lower – bound, estimate of thebenefits. Comparing this value to the cost of reducingambient pollution can provide policy makers with aguide to the net benefits of reducing air pollution interms of reduced incidence of health related illnesses.Of course, a more comprehensive analysis would needto include the other benefits of reducing air pollution,such as mortality and damages to agricultural andagricultural goods.

Documents

Valuing Reduced Morbidity:A Case Study of the Persian Gulf Environmental Damages