(HEMA) Initiative. - OAS

ESTIMATING ECONOMIC BENEFITS OF
ENVIRONMENTAL HEALTH INTERVENTIONS
WITHIN THE CONTEXT OF THE HEALTH AND
ENVIRONMENT MINISTERS OF THE AMERICAS
(HEMA) INITIATIVE
Prepared by the OAS Secretariat
Office for Sustainable Development and Environment 1
Submitted to Government of Canada/Environment Canada
August 2005
EXECUTIVE SUMMARY
Progress in identifying the interaction between environmental quality and human health hazards
has improved significantly in recent years. One result of an improved understanding of environmental
health linkages is an increase in the number of studies that attempt to quantify in financial
terms the economic costs of environmental health hazards, and the benefits of policy interventions.
Significant challenges remain in quantifying the direct and indirect costs of environmental
health effects, and balancing those against the benefits of preventative action leading to reduced
levels of health-related diseases. In general, economic benefits associated with regulatory or policy
interventions tend to be systematically undervalued. Although the direct cost burdens of environmental
regulations is relatively well understood, the extent, distribution and long-term repercussions of
environmental health benefits remain far more difficult, largely because those benefits are by definition
diffuse and largely indirect.
For example, the estimated direct cost of enacting the Clean Air Act (CAA) alone in United States
is between US$ 20 billion to US$ 30 billion per year. The estimated total benefits that accrue in
terms of human health and welfare benefits as a direct result of that Act includes 100,000 to
300,000 fewer premature deaths per year, and 30,000 to 60,000 fewer children each year with intelligence
quotients below 70. 2 The economic benefits of implementing the Clean Air Act between
1970 and 1990 are estimated to be between US$ 5 trillion to US$ 50 trillion greater than the costs.
Another example comes from the water sector, where an increase in water and sanitation infrastructure
and services by US$ 11 billion per year above current expenditures would result directly in
economic benefits in excess of US$ 84 billion per annum. The main economic benefit identified is
a global decline in diarrheal disease by 10 percent.
Despite these and literally hundreds of other studies, numerous and fundamental challenges
remain in quantifying human health costs and benefits. 3 In general, most health effects attributable to
environmental degradation -notably pulmonary, cardiac, vascular, neurological and other disease- are
attributable to a wide variety of other risk factors. Accordingly, isolating and then quantifying the
impact of pollution and environmental degradation on human health is difficult to distinguish
from other human health risks. In virtually all countries, gaps in environmental changes and
human health hazard causal relationships are significant. So too are scientific gaps in basic human
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