Value of Statistical Life Analysis and Environmental Policy: A White Paper with Appendices for Presentation to Science Advisory Board - Environmental Economics Advisory Committee (2004)

Paper Number: EE-0483

Document Date: 04/21/2004

Author(s): USEPA: Dockins, Chris; Maguire, Kelly; Simon, Nathalie; Sullivan, Melonie

Subject Area(s): Economic Analysis, Benefits Valuation; Revealed Preferences, Stated Preferences, Value of Statistical Life, Mortality Valuation

Keywords: Economic Analysis, Benefits Valuation; Revealed Preferences, Stated Preferences, Value of Statistical Life, Mortality Valuation

Abstract:

In the early 2000s, EPA was in the process of revising and updating its Guidelines and as such we are revisiting our approach to valuing mortality risk reductions. The literature has grown considerably since EPA's default estimate was derived and several EPA-funded reports have raised issues related to the robustness of estimates emerging from the mortality risk valuation literature. Furthermore, several meta-analyses have been conducted of this literature, providing new means of deriving central, default values for consideration. EPA's goal in bringing this issue to the SAB-EEAC is to seek expert opinion and guidance regarding the most appropriate way in which to proceed in updating the VSL estimate used to assess the mortality risk reductions from environmental policy.　

It is important to note that this discussion focuses exclusively on mortality risk valuation. While the authors recognize the importance of morbidity and co-morbidity risks, the focus of this particular White Paper is on mortality; morbidity will be addressed at a future time.　

To help inform the discussion, this paper provides background on current EPA practices for valuing mortality risk reductions, briefly summarizes the findings of three cooperative agreement reports on various segments of the literature, and reviews three recent meta-analyses that derive aggregate VSL estimates. The paper concludes with charge questions for consideration and discussion by the EEAC members.

Contents include:

Value of Statistical Life Analysis and Environmental Policy: A White Paper
Appendix A. Value of Statistical Life Estimates on Which EPA VSL Estimate is Based
Appendix B. Excerpts from Review of the Revised Analytical Plan for EPA’s Second Prospective Analysis – Benefits and Costs of the Clean Air Act 1990-2020, Draft Report, #EPA-SAB- COUNCIL-ACV-XXX-XX, March 5, 2004.
Appendix C. How Robust Are Hedonic Wage Estimates of the Price of Risk? by Dan A. Black, Jose Galdo and Liqun Liu
Appendix D. Robustness of VSL Estimates from Contingent Valuation Studies by Anna Alberini
Appendix E. Self-Protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy by Glenn C. Blomquist
Appendix F. An Empirical Bayes Approach to Combining Estimates of the Value of a Statistical Life for Environmental Policy Analysis by Ikuho Kochi, Bryan Hubbell, and Randall Kramer
Appendix G. What Determines the Value of Life? A Meta Analysis by Janusz R. Mrozek and Laura O. Taylor
Appendix H. The Value of a Statistical Life: A Critical Review of Market Estimates Throughout the World by W. Kip Viscusi and Joseph E. Aldy
Appendix I. VSL Studies Used in Three Meta Analyses
Appendix J. Bibliography of New VSL Studies

This paper is part of the Environmental Economics Research Inventory.

Value of Statistical Life Analysis and Environmental Policy: A White Paper and Appendices A-J (2004) (pdf) (3.4 MB, 04/21/2004, EE-483A-K)
To help inform the discussion, this paper provides background on current EPA practices for valuing mortality risk reductions, briefly summarizes the findings of three cooperative agreement reports on various segments of the literature, and reviews three recent meta-analyses that derive aggregate VSL estimates. The paper concludes with charge questions for consideration and discussion by the EEAC members. Full copies of the cooperative agreement reports and meta-analyses are added as appendices.