CAFE CBA – Draft Baseline Results Paul Watkiss and Steve Pye, AEA Technology Environment Mike Holland, EMRC Fintan Hurley, IOM

Update on Progress Phase 1 = development and baseline  Draft final methodology completed early July 2004  2 nd Stakeholder consultation workshop mid July 2004  Peer review August – September 2004  Alan Krupnick, Bart Ostro, Keith Bull  First application to baseline November 2004  Impacts (WG) today, valuation to follow later  Revised methodology report mid November 2004 (for SG 18 th )  Application to scenario December onwards

Benefits Model Framework  Bring analysis of different impacts together – quantification and valuation – stock at risk, functions, values  Based around GIS  Take pollution concentration output from RAINS directly, though some additional work with EMEP data for additional pollutants  Work at 50 km 2 resolution, with potential for higher resolution  Transparent framework – easy to update  Extended sensitivity analysis  Complemented by extended-CBA (qualitative) for some categories

Health Benefits Considered  Aim to undertake a HIA  Includes impacts with high confidence but also new impacts  Deaths brought forward from ozone  Chronic mortality from fine particulates (PM 2.5 ) primary and secondary  Respiratory hospital admissions (ozone) and (PM 10 )  Restricted activity days (PM 2.5 ) minor RAD (PM 2.5, ozone)  Infant and childhood mortality (PM 2.5 )  Chronic bronchitis (PM 2.5 chronic morbidity)  Respiratory symptoms in adults and in children (PM 10 )  Some additional impacts to finalise + sensitivity RAINS + CBA

Health Benefits Approach  % change in background rates with pollution increment  Issues with data collection for rates, especially in NMS  Issues with definitions between countries  Number of cases per 100,000 people per pollution increment  Based on original studies and rates  Run for baselines with and without climate measures  2000, 2010, 2020, where available 4 met years (22)

PM Baseline Impacts - RHA

 PM and Respiratory Hospital Admission by EU country in 2000, 2010, 2020 EU /year in 2000 falling to 31000/year in 2020 PM Baseline Impacts - RHA

Baseline Infant Mortality Rates

PM Baseline Impacts – Infant Mortality

PM Baseline Impacts – Infant Mortality  PM and Infant (1-12 months) mortality by EU country in 2000, 2010, 2020 EU25 530/year in 2000 falling to 260/year in 2020

Significant reductions over baseline period  Hundreds of infant deaths  Tens of thousands of serious cardiac/respiratory cases  Hundreds of thousands of cases of medication use  hundred million minor respiratory cases (1 in 2 two people per year)  Potentially hundred thousand severe chronic morbidity effects PM Baseline Impacts – EU 25 But In 2020 still

Ozone Baseline Impacts – RHA

Ozone (SOM35) Baseline Impacts – mRAD ozone and minor restricted activity day by EU country in 2000, 2010, million to 39 million EU25

Ozone Baseline Impacts – EU25 Mostly significant reductions over baseline period  Tens of thousands of deaths brought forward  Tens of thousands of serious cardiac/respiratory cases  Tens of millions of minor respiratory cases

Sensitivity Analysis Also calculated  Chronic mortality PM, expressed in numbers of deaths (now part of Core analysis)  Acute mortality PM  Sensitivity of ozone effects with no threshold

Next Steps  Remaining issues  PM 10 vs PM 2.5 metric and conversion  Data on background rates  Some remaining functions (both sensitivity vs. core)

Valuation  Total economic cost from air pollution in 2000, 2010, 2020  For acute morbidity, annual rates directly assessed from impacts  For chronic effects, note not an annual effect  Move towards a new sustained pollution level – total benefits for the population over future years  Consistent with standard economic analysis – discount benefits in future years (e.g. consistent with accidents in transport)  Evidence from NewExt shows that people do discount, in relation to willingness to pay for a change in risk of death now vs. later

Man-Made and Natural Environment  Damage to buildings – corrosion and soiling  Crops  Ecosystems  Cultural Heritage  Other (visibility)  Social (employment, deprivation/inequality)  Ancillary (greenhouse gas emissions)  Economic (employment/growth) Quantified and monetised impact pathway Extended CBA Outside core analysis

Stock at Risk – e.g. Wheat

Next Steps  Valuation of materials  Some minor amendments from ICP materials (April next year)  Crops – flux based approach based on Defra work  Finalised March next year  Interim position – quantify using existing data and approaches

Conclusions  Methodology peer review and agreed – into model (GIS benefit tool)  Demonstrated working model on benefits  Linked to RAINS output – demonstrated models work together to provide consistent outputs and analysis  Draft analysis of baseline complete – benefits (physical units)  Initial conclusions - move from mortality to morbidity will be significant in terms of the ‘evidence for health and air pollution’ – numbers of cases in millions Next steps  Incorporation of EMEP transfer matrix data for all pollutants (additional to those needed in RAINS)  Valuation – how much does air pollution cost the EU each year?  Scenario analysis

Presentation of the results  Quantification of costs with uncertainties (RAINS)  Quantification of impacts (RAINS/ALPHA2)  Monetisation of impacts where possible  Initial comparison of costs and benefits  Extended CBA  Uncertainty analysis for benefits  Bias analysis  Statistical analysis  Sensitivity analysis  Further comparison of costs and benefits  Uncertainties  GEM-E3 outputs, competitiveness, employment

Quantified impacts  Region  EU25  EU15  New Member States  UNECE  Individual countries  Economic basis  By scenario  Marginal

Quantification of impacts

Initial comparison of costs and benefits  Are model estimate benefits > model estimate costs?  What is the ratio of costs to benefits?  Is this likely to change much when uncertainties are accounted for?

Extended CBA  Previously called ‘MCA’, ‘modified MCA’  Purpose  Raise profile and understanding of unquantified impacts  Are these effects so important that they would change views on the balance of costs and benefits?  Improve understanding of the impacts that we do quantify

Questions addressed through the Extended CBA  What is…  … acute mortality?  … chronic bronchitis?  … eutrophication?  … etc.  How important are effects in the broader European context  … health effects caused by pollution vs. total effects?  … visible injury on crops from ozone exposure?  … pollution damage to Europe ’ s cultural heritage?

Extended CBA and chronic bronchitis  Definition of impact: Bronchitis is an inflammation of the bronchi, the air passages connecting the windpipe (trachea) with the sacs of the lung (alveoli) where oxygen is taken up by the blood. This inflammation causes excessive phlegm (or mucus) production and swelling of the bronchial walls, resulting in cough and the expectoration of phlegm. Chronic bronchitis is defined to be the occurrence of chronic cough or chronic phlegm for at least three months of the year, for at least two years.

Extended CBA and chronic bronchitis  Strength of association with pollution: The SALPADIA study carried out at eight study sites in Switzerland found a statistically significant association between chronic cough or phlegm production and exposure to PM10 among non-smokers (OR: 1.27 per 10 μg.m-3 increase in annual concentration ; 95%CI: 1.08, 1.50), with similar results for current and former smokers.

Extended CBA and chronic bronchitis  Treatment of impact: There is no cure for chronic bronchitis, and treatment is primarily aimed at reducing irritation in the bronchial tubes. Chest infections are common in those with chronic bronchitis, and these can be treated with antibiotics. In addition, bronchodilator drugs may be prescribed to help relax and open up air passages in the lungs.

Extended CBA and chronic bronchitis Related effects: The blocking of the airways can cause symptoms of breathlessness and wheezing. Once the bronchial tubes have been irritated over a long period of time, they become more susceptible to infections. At its most extreme, chronic bronchitis can cause serious injury to the lungs leading to serious respiratory problems or heart failure.

Extended CBA and chronic bronchitis Frequency of occurrence of impact: Information from the ‘Global Burdens of Disease’ study estimates an annual incidence of chronic obstructive pulmonary disease (approximately equivalent to chronic bronchitis) in the WHO Europe sub-region of 770,000 in a population of 877,866,000; which is a rate of 88 per 100,000.

What this would give us…  A nice description of impacts  Mix of quantitative and qualitative data  Buried at the back of a long report  How do we draw attention to the things that we cannot monetise?

Presenting results Costs€€€€€ Benefits Health€€€€€ see ref… etc.€€… Sub-total benefits€€€€€ Ecosystem effects Physical impactSummary RAINS results Economic effect    see ref… Cultural heritage   see ref… Crops – visible injury  see ref… Effects of ozone on paintNegligible

Key      Considered likely to have a significant effect at the European scale    May have a significant effect at the European scale  May have a significant effect locally, but not Europe-wide NegligibleUnlikely to be important at national or local scales

Conclusions on the role of the Extended CBA  Can integrate some impacts with CBA much better than previously  Improves understanding  Provides decision makers with a structure from which to factor their own weightings on damage to cultural heritage, ecosystems and other impacts into the CBA

Dealing with uncertainty  Variety of techniques  Extended CBA  Bias analysis  Statistical analysis  Sensitivity analysis

Bias analysis Source of biasEffect Omission of eutrophication impacts --- Omission of acidification impacts --- Omission of organic aerosol -- Use of health functions from western Europe --? Use of incidence data from all Europe ++? Effect of EU subsidy on world crop prices + Limited availability of crop - ozone flux data +/- …

Statistical analysis  To  Account for uncertainty through the chain of quantification  Concentrate on the impacts that contribute most to total benefits

Sensitivity analysis  Again, focused on effects that contribute most to benefits, particularly mortality  Functions used  Baseline rates  Valuation procedure  Discounting

Summary  Much work has gone into refinement of methods for air pollution CBA including presentation and interpretation of outputs  Methodology has been extensively peer reviewed  More extensive framework than previously used  Unquantified effects  Description of uncertainties and their effects