MONETARY VALUES FOR AIR POLLUTION RISK OF DEATH: A CONTINGENT VALUATION SURVEY ppt

GREQAM Groupement de Recherche en Economie Quantitative d'Aix-Marseille - UMR-CNRS 6579 Ecole des Hautes Etudes en Sciences Sociales Universités d'Aix-Marseille II et III Document de Travail n°2008-05 MONETARY VALUES FOR AIR POLLUTION RISK OF DEATH: A CONTINGENT VALUATION SURVEY Olivier CHANEL Stéphane LUCHINI February 2008 halshs-00272776, version 1 - 11 Apr 2008 Mo n e ta r y Valu e s for A ir Pollu tio n Ris k of Death: A Contingen t Valuation Survey ∗† Olivier Chanel Stéphane Luc hini Greqam-Idep Greqam-Idep CNRS CNRS Fe bruary 2008 Abstract In this paper, we extend the individual dynamic model of life-time resource allocation to assess the monetary value given to the increase in survival prob- abilities of every mem ber of a household induced by improved air quality. We then interpret this monetary value as a flo w of Value of Life Years Lost (VOLY), and estimate the corresponding Value of a Prevented Fatality (VPF) for differ- ent ages and differen t household members. Using French contingent valuation data on air pollution, we estimate a mean VOLY of C150,000 and a mean VP F of C2. 15 million. In addition, we find an inverse U-shaped relationship betwe en age and VPF. Keywor ds: Va lue of statistical life, Air pollution, Familial Altruism, Contin g ent Valuation . JEL Classificatio n : D6 , C9 ∗ Financial support from the French En vironment Ministry (Primequal grant n ◦ 36/98) and tech- nical support from the Provence-Alpes-Côte-d’Azur Regional Council are gratefully acknowledged. We thank Marjorie Sweetko and Miriam Teschl for helpful suggestions. † Corresponding author: Olivier Chanel. GREQAM, 2 rue d e la Charité, F-13002 Marseilles, France, e-mail: olivier.chanel@univmed.fr. 1 halshs-00272776, version 1 - 11 Apr 2008 A A halshs-00272776, version 1 - 11 Apr 2008 A A ¯n n n = 1, , ¯n j n T t u t (.) j µ j t S t S t = e −  t 0 µ(s)ds halshs-00272776, version 1 - 11 Apr 2008 t j S t /S j = S t,j n = 1 j n max c j n +t E [u(c j n )] =  T −j 1 0 e −δ t t ¯n  n=1 S j n +t,j n u(c j n +t )dt E[.] u(.) c T c j n +t j n + t δ j 1 +t y t t = j, . . . , T  T −j 1 0 e −rt ¯n  n=1 S j n +t,j n (y j n +t − c j n +t )dt = 0 y j n +t j n +t t  0 r c ∗ j n +t halshs-00272776, version 1 - 11 Apr 2008 c j n +t n c ∗ j n +t λ ∗ H t =  T −j 1 0 e −δ t t ¯n  n=1 S j n +t,j n u(c j n +t )dt + λ ∗  T −j 1 0 e −rt ¯n  n=1 S j n +t,j n (y j n +t − c j n +t )dt λ ∗ V j 1 /λ ∗ (j 1 ) V j 1 λ ∗ (j 1 ) = 1 λ ∗ (j 1 )  T −j 1 0  ¯n  n=1 S j n +t,j n  e −δ t t u(c ∗ j n +t )  + λ ∗ e −rt (y j n +t − c ∗ j n +t )  dt λ ∗ (j 1 ) j 1 j n µ j n D dµ dS j n +t,j n j n + t t  0 W T P dS j n +t,j n W T P  T −j 1 0  ¯n  n=1 dS j n +t,j n  e −δ j 1 +t t u(c ∗ j n +t )  + λ ∗ e −rt (y j n +t − c ∗ j n +t )  dt−λ ∗ (j 1 )W T P = 0 V j 1 /λ ∗ (j 1 ) V j 1 λ ∗ (j 1 ) = W T P  T −j 1 0  ¯n  n=1 S j n +t,j n  e −δ t t u(c ∗ j n +t )  + λ ∗ e −rt (y j n +t − c ∗ j n +t )  dt  T −j 1 0  ¯n  n=1 dS j n +t,j n  e −δ t t u(c ∗ j n +t )  + λ ∗ e −rt (y j n +t − c ∗ j n +t )  dt halshs-00272776, version 1 - 11 Apr 2008 D S j n +t,j n ˜ S j n +t,j n n j n dµ ˜ S j n +t,j n = e −  j n +D j n [µ(s)−dµ]ds e −  t j n +D µ(s)ds = e Ddµ S j n +t,j n n = 1, , ¯n Ddµ dS j n +t,j n = ˜ S j n +t,j n − S j n +t,j n = S j n +t,j n  e Ddµ − 1  ≈ S j n +t,j n Ddµ V j 1 λ ∗ (j 1 ) = (Ddµ) −1 W T P ¯n j n n = 1, , ¯n dµ j j V j 1 /λ ∗ (j 1 ) V j 1 λ ∗ (j 1 ) = ¯n  n=1 V P F n W T P W T P halshs-00272776, version 1 - 11 Apr 2008 j V P F j =  T j e −δ(t−j) S t,j V OLY dt V j 1 λ ∗ (j 1 ) = (Ddµ) −1 W T P = V OLY ¯n  n=1  ¯ T n j n e −δ(t n −j n ) S t n ,j n dt n ¯ T n n δ i i  ii iii halshs-00272776, version 1 - 11 Apr 2008 halshs-00272776, version 1 - 11 Apr 2008 dµ D halshs-00272776, version 1 - 11 Apr 2008 [...]... nicely match the relationship between age and VPF found in the original data Second, we assess a VOLY associated with air pollution risk of death of A1 50,000, which translates into a VPF with a maximum of A2 .5 million at age C C 42 with a mean of A2 .15 million This is in line with the monetary values already C available in the literature 16 References Alberini A and A. 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