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"Dependency Theory: An Introduction," Vincent Ferraro, Mount Holyoke College, July

Intensification of agriculture, industrialization and increasing energy use are the most severe driving forces of environmental health problems. For countries in the early stages of development the major environmental hazards to health are associated with widespread poverty and severe lack of public infrastructure, such as access to drinking water, sanitation, and lack of health care as well as emerging problems of industrial pollution.

However, environmental health hazards are not limited to the developing world. Although at a lesser extend, environmental risks are also present in wealthier countries and are primarily attributed to urban air and water pollution. Occurrences of Asthma are rising dramatically throughout the developed countries, and environmental factors appear to be at least partly to blame [ 1 ]. The Millennium Ecosystem Assessment [ 2 ] synthesis report warns that the erosion of ecosystems could lead to an increase in existing diseases such as malaria and cholera, as well as a rising risk of new diseases emerging.

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Global South

Climate change is also posing risks to human population health and well-being and thus is emerging as a serious concern worldwide [ 3 — 6 ]. In climate change was estimated to be responsible for approximately 2. According to the IPCC third assessment report the world temperature is expected to further rise during the century, implying increased health threats for human populations, especially in low-income countries.


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Reviewing the US literature addressing health impacts of climate variability and change Ebi et al. A spread in vector—borne diseases, like malaria, is also expected [ 8 , 9 ].

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A study in Mexico revealed that lower greenhouse gases emissions would result in avoidance of some 64, premature deaths over a twenty year period [ 4 ]. Leading death causes worldwide are summarized in Table 1. Source: World Health Organization [ 10 ]. This paper provides a review of the literature on valuation studies eliciting monetary values associated with reduced environmental risk and in particular focusing on reduced indoor and outdoor air pollution, enhanced water quality and climate change mitigation. The findings of the valuation studies have important policy implications, since the environmental risk factors that are studied can largely be avoided by efficient and sustainable policy interventions.

Minimizing exposure to environmental risk factors by enhancing air quality and access to improved sources of drinking and bathing water, sanitation and clean energy is found to be associated with significant health benefits and can contribute significantly to the achievement of the Millennium Development Goals of environmental sustainability, health and development.

Quantifying the impacts of environmental degradation on human health is essential for the development of well-informed policies by the health sector and consequently many valuation studies have been conducted worldwide the past decades addressing environmental risks to public health. The main approaches for health impact valuations can be broadly classified into revealed and stated preference techniques.

Revealed preferences include cost of illness, human capital surveys, hedonic pricing and the Quality Adjusted Life Year studies.


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Cost of illness studies measure the direct medical costs, nursing care, drugs and indirect opportunity economic costs associated with a disease and estimate the potential savings from the eradication of the disease. Human capital surveys estimate the productivity loss measured in workdays due to illness. This approach also values loss of life based on the foregone earnings associated with premature mortality. The notion is that people should be willing to pay at least as much as the value of the income they would lose by dying prematurely.

Damage costs estimates from environmental hazards for the economy as a whole are also obtained through general equilibrium macroeconomic modeling. These studies assess welfare impacts in a national or international level by examining all the sectors of the economy and estimating environmental health impacts on parameters of the economy like income and consumption.

Elements in a new conceptual architecture

The values for a Life Year range from 0, implying death, to 1, implying a year of perfect health. Therefore, QALYs provide an indication of the benefits from a healthcare intervention in terms of health-related quality. Combined with the costs of providing different interventions, a cost-effectiveness analysis cost per QALY can follow to allow for comparisons of different interventions. A monetary value can also be placed on a QALY to estimate the dollar benefits of a health intervention or policy and allow for a subsequent cost-benefit analysis. Stated Willingness to Pay, elicited through a contingent valuation study or a discrete choice study, is often used, to monetize QALYs.

Other methods to value a QALY include time-trade-offs, standard gamble and the visual analogue scale. Hedonic pricing methods assess differences in the price of housing in polluted or unpolluted areas, or the difference in wages between hazardous and non-hazardous jobs. The respective differences between the two methodologies relate to the way in which the economic values are elicited.

In a contingent valuation questionnaire respondents are presented with a valuation scenario that describes the changes in the provision of the public good resulting from the policy under evaluation and, in the simplest open-ended format, are asked about their maximum Willingness to Pay for the policy to be implemented.

One of the attributes is usually price, so that the marginal value of the other attributes can be evaluated in monetary terms. Accordingly, respondents are presented with a set of alternatives constructed from different combinations of the levels of attributes, and are asked to choose their most preferred. Similarly a choice experiment can be used to examine policy implications of a policy or management strategy with policy impacts being the attributes to be valued.

Before valuing the health damage the establishment of a dose-response function relating pollutant concentrations to health impacts is required [ 12 ]. The impacts of environmental degradation on mortality, expressed as the increase in the probability of premature death, and quality of life, expressed as reduction of the morbidity risk, are thus initially considered.

Accordingly respondents are asked to either state their willingness to pay for a prevention scenario stated preference approach or the benefits are elicited through the costs that would be saved if the risk was eradicated cost of illness studies. Benefits are mainly reported by calculating the Value of a Statistical Life For a review of the literature calculating the value of a statistical life based on labor and housing market data see Viscusi and Aldy [ 13 ].


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  • The Value of Statistical Life VSL is calculated by dividing the value of a small risk change by the actual change in risk and thus captures the effect of small changes in the risk of premature death for a large population of potentially exposed people [ 14 ]. Since primary data collection to establish the dose response functions or proceed with the valuations can be expensive and time-demanding, there is substantial policy interest in using benefit transfer techniques.

    In this context, original values from existing studies are transferred to policy sites after correcting for certain parameters. Given the number of valuation studies, several meta-analyses studies have been recently conducted. Following this approach valuation estimates from existing studies are collected and the determinants of these estimates are examined. In a meta-analysis regression, therefore, the dependent variable is a common summary statistic, such as a predicted variable for the Willingness to Pay, whereas the independent variables include characteristics of the primary data, study design, valuation method, sample size, model specification, econometric methods, date of publication [ 15 ].

    Meta-analyses can feedback the establishment of value transfer functions to estimate values for policy sites of interest based on properly adjusted information from existing studies on similar sites, study sites [ 16 ]. Each of the methods described has its own strengths and limitations.

    The choice between these methods should be case-study driven, that is, it should be a function of case-study-specific data availability and socio-economic-political framework. In human capital surveys it is often difficult to assign wages for housework or non-cash labour. Hedonic methods require a well functioning market for housing or labour, which internalizes the health risks associated with a location or a job. The cost of illness approach fails to capture the full damage of illness, such as psychological suffering and physical pain and should be thus treated as a lower bound of the total value of health risks aversion [ 17 ].

    Using QALY to estimate the damage costs may also lead to underestimations [ 18 ]. Opponents of QALYs use argue that these measures cannot in general appropriately represent individual preferences for health, while they are consistent with the utility theory under very restrictive conditions [ 19 ]. Macroeconomic modelling is often based on simplistic assumption regarding the economy while many impacts are unquantifiable and are thus not modelled [ 5 ].

    The contingent valuation method CVM , although widely used, has been criticised for its lack of reliability since it is associated with biases, such as hypothetical bias, strategic bias, yes-saying bias and embedding effect [ 20 , 21 ]. Hypothetical bias contends that respondents may be prepared to reveal their true values but are not capable of knowing these values without participating in a market in the first place.

    Strategic bias occurs when respondents deliberately under- or overstate their WTP. Respondents may understate their WTP if they believe that the actual fees they will pay for provision of the environmental resources will be influenced by their response to the CV question. Conversely, realising that payments expressed in a CV exercise are purely hypothetical, respondents may overstate their true WTP in the hope that this may increase the likelihood of a policy being accepted.

    Yea-saying bias indicates that respondents may express a positive WTP because they feel good about the act of giving for a social good although they believe that the good itself is unimportant while embedding bias implies that WTP is not affected by the scale of the good being offered. To address these, the Blue Ribbon Panel under the auspices of NOAA [ 22 ] has made recommendations regarding best practice guidelines for the design and implementation of contingent valuation studies.

    Comparing the stated preference methods for environmental valuation Boxall et al. The latter has a clear benefit compared to other valuation methods as it leads respondents to explicitly make trade-offs between the various attributes of the situation and thus provides policy-makers with valuable information about public preferences for many states of the environment.

    Environmental health effects of a policy or project can therefore be explicitly addressed and valued. Therefore it is our opinion that the application of CEs should be further enhanced in health economics to evaluate health impacts of environmental policies.

    There is increasing recognition that linked environment and health impacts require economic assessment in order to receive adequate consideration in policy [ 1 ]. Consequently, a huge increase in the number of valuation studies trying to quantify the environmental impacts on human health in monetary terms and elicit public preferences for health and environmental policies that reduce the risk of illness or mortality has been experienced in recent years.

    In the subsequent sections important applications of the valuation techniques that have been conducted to estimate social benefits associated with increased air and water quality as well as climate change aversion are reviewed. Limitations of the existing research are addressed in the concluding section and directions for future work are suggested. Air pollution is a major environmental risk to health and is estimated to cause approximately two million premature deaths worldwide per year [ 24 ].

    A reduction of air pollution is expected to reduce the global burden of disease from respiratory infections, heart disease, and lung cancer.