1. Methods for Benefits Assessment and CBA for the NEC Directive Revision
Mike Holland, EMRC
Steve Pye, AEA Energy and Environment
With acknowledgements to Paul Watkiss, PWA; Fintan Hurley, IOM; and Alistair Hunt, Metroeconomica

2. Basis for quantification of benefits
General methods developed since 1991 under the EC DG Research ExternE Programme
Applied in preparation of earlier Directives and other work for DG Environment and UNECE:
Air quality directives on CO, benzene, ozone, PAHs
Acidification strategy
Original NEC Directive
Gothenburg Protocol
Waste Incineration Directive
Position on PVC Waste Management
etc.

3. Specific methodology developed 2004/5 under the CAFE Programme
Quantification of benefits under CAFE and for the revision of the NEC Directive
Specific methodology developed 2004/5 under the CAFE Programme
Reflecting latest European research on impact assessment and valuation
Methods used for NEC analysis are the same as those subjected to extensive discussion and international peer review under CAFE

4. Available reports Reports available at http://cafe-cba.aeat.com/
Volume 1: Overview
Volume 2: Health impact assessment and valuation
Volume 3: Uncertainty analysis

5. The role of CBA in the NEC analysis
Scenario development
and target setting
EMEP
Modelling of pollutant
concentration across
Europe on 50 x
50 km grid
Other models
TREMOVE
PRIMES
Etc.
RAINS model
Processing of
pollutant data
Assessment
vs. targets, e.g.
critical loads
exceedance
Cost analysis
CBA
Quantification of impacts
Health, crops,
materials, social and
macroeconomic
effects, etc.
Monetisation of impacts
where possible
Comparison of quantified
costs and benefits
Uncertainty analysis -
Related activities
EC DG Research Programmes
Working Groups under Convention on Long
Range
Transboundary Air Pollution (CLRTAP)
WHO Europe commentary on air pollution impacts
Activities specific to CAFE

6. The impact pathway approach

7. Health Impacts quantified Ozone PM2.5 Acute effects on mortality
Acute effects on morbidity
Hospital admissions, restricted activity days, use of respiratory medicine, etc.
PM2.5
Chronic effects on mortality (infants and those > 30 years)
Chronic effects on morbidity
Bronchitis

8. Health damage Population: UN sources
Sensitivity adjustments: Epidemiological literature
Response functions: Agreed by WHO working group convened under CAFE
Valuation: Review for CAFE
Potentially significant unquantified effects
Effects of long term exposure to ozone
Effects of secondary organic aerosols

9. Crop damage Ozone effects on crop production
Crops database: SEI
Response functions: ICP Vegetation
Crop prices: FAO website
Potentially significant unquantified effects
Ozone damage to pasture
Visible injury to crops during ozone episodes
Photo from Prof. D. Velissaroiu,
Kalamata, Greece

10. Materials damage Acid damage to utilitarian buildings
ICP Materials
Ozone damage to rubber (insignificant)
Potentially significant unquantified effects
Damage to cultural heritage

11. Ecological damage
Not quantified in the benefits analysis, simply take outputs from GAINS
Stakeholders need to consider how important they are in appraisal of final results
Acidification in 2020
Eutrophication in 2020

12. Uncertainty analysis
Uncertainty analysis is critical for the comparison of costs and benefits
Methods account for three types of uncertainty
Statistical variation
Sensitivity to methodological assumptions
Inherent biases in the models used

13. Uncertainty analysis – first steps (example from the CAFE-CBA, not NEC Directive analysis)
Takes account of statistical uncertainties in input parameters and key methodological assumptions
Provides output in terms of probability distributions for each assumption set
Example shows probabilities for CAFE scenario B (medium ambition)
VOLY, median VSL median
VOLY, mean VSL mean

14. Example further output of uncertainty analysis (again from CAFE-CBA)
Describe the probability of deriving a net benefit accounting for sensitivity to:
Methodological assumptions
Assumptions on uncertainty in cost estimates
Example shows probabilities for CAFE scenario C (high ambition)

15. Summary Methods developed since the early 1990s
CAFE-CBA methodology, as used here, refined in collaboration with WHO, LRTAP ICPs, etc. and subject to international peer review
Similar approaches used elsewhere, e.g.:
USEPA
Some EU Member States
Analysis quantifies impacts on health, crops and materials in monetary terms
Reports ecological risk via critical loads/levels exceedance calculated by GAINS
Methods include uncertainty analysis (statistical, methodological, modelling bias)