An ex post cost-benefit analysis of the nitrogen dioxide air pollution control program in Tokyo

A S Voorhees, S Araki, R Sakai, H Sato
Journal of the Air & Waste Management Association 2000, 50 (3): 391-410
The benefits and costs of past nitrogen dioxide (NO2) control policies were calculated for Tokyo, Japan, using environmental, economic, political, demographic, and medical data from 1973 to 1994. The benefits of NO2 control were estimated as medical expenses and lost work time due to hypothetical no-control air concentrations of NO2. Direct costs were calculated as annualized capital expenditures and 1 year's operating costs for regulated industries plus governmental agency expenses. The major findings were as follows: (1) Using Tokyo's average medical cost of pollution-related illness, the best net estimate of the avoided medical costs due to incidence of phlegm and sputum in adults was 730 billion yen ($6.08 billion; 1 U.S. dollar = 120 yen). (2) The best net estimate of the avoided medical costs due to incidence of lower respiratory illness in children was 93 billion yen ($775 million). (3) Using Tokyo's average duration of pollution-related illness and average wages, the best net estimate of the avoided costs of lost wages in workers was 760 billion yen ($6.33 billion). (4) The best net estimate of the avoided costs of lost wages in mothers caring for their sick children was 100 billion yen ($833 million). (5) Using Tokyo-specific data, the best net costs were estimated as 280 billion yen ($2.33 billion). (6) Using human health and productivity benefits, and annualized capital cost and operating cost estimates, the best net benefits-to-costs ratio was 6:1 (upper limit 44:1; lower limit 0.3:1). Benefit calculations were sensitive to assumptions of mobile source emissions and certain health impacts that were not included. Cost calculations were highly dependent on assumptions of flue gas volume and fuel use. For comparative purposes, we identified other studies for air pollution-related illness. Assumptions that formed the basis for most of the inputs in the present study, such as duration of illness, medical treatment costs, per person illness in children, and lost wages for working mothers, were similar to those recommended in the literature. Lost wages in sick workers and per capita illness incidence in adults were higher than numbers reported elsewhere. Further advances in cost-benefit analysis (CBA) procedures to evaluate the economic effectiveness of NO2 controls in Tokyo are recommended to estimate impacts and values for additional human health benefits, ecosystem health and productivity effects, and nonliving system effects, as well as benefits of ancillary reductions in other pollutants. The present study suggests that Tokyo's past NO2 control policies in total were economically quite effective.

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