FINAL REPORT Phase II: Estimating Health and Economic Damages Illness Costs Illness CostsIllness Costs Illness Costs of ofof of Air Pollution Air PollutionAir Pollution Air Pollution Submitted to Ontario Medical Association By DSS Management Consultants Inc. July 26, 2000 DSS Management Consultants Inc. Designers of Decision Support Systems July 26, 2000 Dr. Ted Boadway Executive Director, Health Policy Department Ontario Medical Association 525 University Avenue Suite 300 Toronto, ON M5G 2K7 Dear Dr. Boadway: Re: Phase II: Estimating Health and Economic Damages Illness Costs of Air Pollution Our File No. 257a.20 Following is our final report for the above project. This report contains complete technical documentation for ICAP and the derivation of all of the data used in that model. As well, the results of applying ICAP to analyze the Ontario Anti-Smog Action Plan are included. Yours truly, Edward Hanna c.c. M. Perley Project Team 1886 Bowler Drive, Pickering, ON L1V 3E4 Telephone: (905) 839-8814, Fax 839-0058 ii Executive Summary For several decades, the Ontario Medical Association has played a leadership role promoting improvements in air quality to prevent illness and premature death. This report builds on these initiatives and develops a quantitative foundation for estimating the health and economic damages caused by air pollution. Accompanying this report is a computer model (ICAP – Illness C osts of Air Pollution) which is based on the data presented in this report. ICAP provides forecasts of health and economic damages for expected or desired future air quality conditions in Ontario. The main body of this report outlines the technical foundations for ICAP. Information requirements and uncertainties are reviewed. The results of an analysis of the Ontario Anti-Smog Action Plan are discussed. Eleven technical appendices deal in detail with various aspects of ICAP and the forecasting of health and economic damages due to air pollution. The impacts of two pollutants (i.e., ozone and particulate matter) on human health are analyzed. Human health impacts are grouped into five broad categories, namely, premature mortality, hospital admissions, emergency room visits, doctor’s office visits and minor illnesses. Each broad illness category is further broken down into specific illness types for a total of 19 specific cardio-respiratory illnesses. For each illness type, the illness rate is forecast by age group (i.e., 0- 17, 18-65, 65+). Economic damages corresponding to these illnesses are forecast according to four discrete components, namely value of loss of life (i.e., increased risk of premature death), value of quality of life (i.e., increased pain and suffering from illness), health care costs and lost productivity (i.e., lost wages and time). Total economic damages are calculated by summing these damage components. This information has been used to analyze the health and economic benefits of Ontario’s Anti- Smog Action Plan (ASAP). The benefits of the ASAP are compared to the expected damages if current air quality conditions remained the same (i.e., the status quo). As well, the benefits of advancing the date for the ASAP reduction targets from 2015 to 2010 are forecast. Health and economic damages associated with background levels of ozone have been deducted from these forecasts. iii In the year 2000, Ontario is forecast to suffer in the order of 1,900 premature deaths, 9,800 hospital admissions, 13,000 emergency room visits and 46 million illnesses as a result of air pollution. (Forecasts of doctor’s office visits are not included due to the absence of supporting epidemiological studies.) If air quality conditions remain constant for the next 20 years (i.e., to the year 2020), these illnesses and deaths will increase substantially. This increase is due to an expanding population as well as an aging population which is at higher risk to air pollution impacts. These health impacts involve about $10 billion in annual economic damages. Loss of life and pain and suffering account for about $4.1 and $4.8 billion of this total. Annual health care costs of air pollution are in the order of $600 million; lost productivity accounts for an additional $560 million in annual damages. These economic damages are expected to increase substantially over the next 20 years. The ASAP will reduce health and economic damages by about 11% overall, compared to the status quo. The residual damages (i.e., those damages expected even with full implementation of the ASAP) in 2015 are substantial and in total are forecast to be in the order of $10.7 billion annually. Advancing the target date for the ASAP from 2015 to 2010 will reduce somewhat the expected damages for the intervening years. Nonetheless, substantial residual damages are forecast. The benefits of the ASAP are largely attributable to emissions reduction measures in the U.S., not to initiatives in Ontario. If Ontario-only impacts of the ASAP are included, the avoided damages amount to about 4% of the total. The potential for over- or underestimates is discussed at appropriate locations throughout the report. It is concluded that these estimates of health and economic damages are underestimates. Recommendations are included in the report with respect to future initiatives to use and improve ICAP for policy analysis. iv Acknowledgements This report was prepared for Dr. Ted Boadway , Director of Environmental Health Policy at the Ontario Medical Association. Dr. Boadway provided ongoing encouragement, support, direction and input to the study from its inception to completion. Michael Perley , Director of the Ontario Campaign for Action on Tobacco, and a consultant to the OMA, also provided ongoing and helpful input over the entire course of the study. Patricia Graham , Assistant to Dr. Boadway, played an invaluable role in facilitating and coordinating the flow of e-mails, reports, phone calls, meetings, etc. relating to the project. This project was funded by the Walter and Gordon Duncan Foundation. Ms. Christine Lee , Executive Director of the Foundation maintained a keen and positive interest from start to finish. The DSS project team involved a number of people with diverse backgrounds. Following is a list of the individuals involved and their responsibilities. Dr. David Bates – Illness risk factors Mrs. Soile Hämäläinen – Administration, report production and graphics Mr. Ed Hanna – Project direction Dr. Robin Hanvelt – Health economics Dr. Kapil Khatter – Environmental health Ms. Dianna Kopansky – Researcher Dr. David McKeown – Environmental health Mr. David Schneider – Health data analyst Mr. Steve Spencer – Computer model design and programming Dr. Peter Victor – Economic valuation The project draws on data from diverse sources. Many people and organizations assisted in providing access to data. This list of sources is long but several sources deserve special mention. Dean Stinson-O’Gorman at Environment Canada is responsible for their Air Quality Valuation Model. He made available documentation and data related to their model. Dr. David Stieb at Health Canada provided helpful comments on some of the inputs included in ICAP. Jack Donnan at the Ontario Ministry of the Energy was helpful in identifying critical relevant information for Ontario. Despite the many individuals and organizations who provided key inputs to this study, DSS accepts responsibility for the contents of this report. Notice: A final draft of this report was circulated to the federal government for comment. Their comments could not be provided before the deadline for issuing this final report. These comments may be incorporated in later version of this report. Any revised versions will be posted on the OMA web-site. v Table of Contents Executive Summary ii Acknowledgements iv Table of Contents v List of Tables ix List of Figures x List of Acronyms xii 1. INTRODUCTION 1 1.1 B ACKGROUND 1 1.2 P URPOSE AND S COPE 2 1.2.1 Project 2 1.2.2 ICAP 3 1.2.3 Technical Report 4 1.3 M ETHODOLOGY 4 2. CONCEPTUAL FOUNDATION 5 2.1 O VERVIEW 5 2.2 R ESOLUTION 7 2.2.1 Spatial Resolution 9 2.2.2 Temporal Resolution 9 2.3 E XPOSED P OPULATION 10 2.4 A IR Q UALITY C ONDITIONS 11 2.5 E XPOSURE /R ESPONSE F UNCTIONS 11 2.6 E CONOMIC V ALUATION 12 2.6.1 Health Care Resource Utilization 13 2.6.2 Lost Productivity 14 2.6.3 Quality of Life 15 2.6.4 Risk of Death 15 2.7 T REATMENT OF U NCERTAINTY 16 3. INFORMATION BASE 18 3.1 P OPULATION 18 3.1.1 Ontario 1996 Population 18 3.1.2 Population Forecasts 18 3.2 A IR Q UALITY 19 3.2.1 Baseline Data 19 3.2.2 Air Quality Forecasts 19 3.3 I LLNESS R ISKS 19 3.4 H EALTH C ARE R ESOURCE U TILIZATION 20 3.4.1 Hospital Admission Costs 20 3.4.2 Emergency Room Visit Costs 20 3.4.3 Doctor’s Office Visit Costs 21 3.4.4 Medication Costs 21 3.5 L OST P RODUCTIVITY 21 3.6 Q UALITY OF L IFE 21 3.7 P REMATURE D EATH 22 3.8 S UMMARY 22 4. UNCERTAINTIES AND GAPS 24 4.1 S OURCES OF U NCERTAINTY 24 4.2 S CIENTIFIC I GNORANCE 25 4.3 S TOCHASTICITY 25 4.4 I MPRECISION 26 4.5 M ETHODOLOGICAL W EAKNESSES 27 5. HEALTH DAMAGE FORECASTS FOR ONTARIO 28 5.1 S CENARIO 1 - N ATURAL B ACKGROUND C ONCENTRATIONS 28 5.1.1 Rationale 28 5.1.2 Health Effects 29 vi 5.1.3 Economic Damages 30 5.2 S CENARIO 2 – M AINTENANCE OF C URRENT L EVELS OF P OLLUTION 31 5.2.1 Rationale 31 5.2.2 Health Effects 32 5.2.3 Economic Damages 38 5.3 S CENARIO 3 – I MPLEMENTATION OF A NTI -S MOG A CTION P LAN IN 2015 39 5.3.1 Rationale 39 5.3.2 Health Effects 39 5.3.3 Economic Damages 41 5.4 R EGIONAL D ISTRIBUTION OF D AMAGES 42 5.5 N EW 2010 T ARGET FOR ASAP 43 5.5.1 Health Damages 43 5.5.2 Economic Damages 43 5.6 U.S. C ONTRIBUTION 44 5.7 C OMPARISON OF R ESULTS 45 5.7.1 Premature Mortality 45 5.7.2 Hospital Admissions 45 5.7.3 Interpretation 46 5.8 S UMMARY 46 6. CONCLUSIONS AND RECOMMENDATIONS 47 6.1 A IR Q UALITY 47 6.1.1 Need for Improved Air Quality Monitoring Data 47 6.1.2 Impacts of Air Quality Initiatives on Ambient Concentrations of Key Pollutants 47 6.1.3 Net Air Quality Effects of Multiple Government Policies 48 6.2 H EALTH E FFECTS 48 6.2.1 Supporting Clinical Studies 48 6.2.2 Multi-Pollutant Exposure/Response Functions 49 6.2.3 Less Acute Air Pollution Induced Illnesses 49 6.2.4 Illness Prevalence 50 6.3 E CONOMIC D AMAGES 50 6.3.1 Improved Estimates of Pain and Suffering Damages 50 6.3.2 Improved Estimates of Medication Costs 51 6.3.3 Doctor’s Office Costs 51 6.4 ICAP 51 6.4.1 Improved Public Awareness 52 6.4.2 Local Analysis of Air Quality Impacts 52 6.4.3 Need for Regular Updating 52 6.5 E NVIRONMENTAL AND H EALTH C ARE P OLICY 52 6.5.1 Significant Residual Damages 53 6.5.2 Cost of Delay 53 6.5.3 Absence of Comprehensive Economic Evaluations 53 Bibliography 54 Appendix A ICAP Model Description Appendix B Population Forecasting Appendix C Air Quality Appendix D Estimation of Morbidity and Mortality Frequencies Appendix E In-patient and Emergency Room Treatment Costs Appendix F Doctor’s Office Treatment Costs Appendix G Medication Costs Appendix H Economic Losses Due to Premature Mortality vii Appendix I Quality of Life Damages Appendix J Lost Productivity Damages Appendix K ICAP Results viii List of Tables Table 5.1 Comparative Human Health Damages With Changes in Air Quality p. 30 Table 5.2 Comparative Economic Damages With Changes in Air Quality p. 31 Table B.1a Breakdown of 1996 Ontario Population By Census Division – Males p. B-3 Table B.1b Breakdown of 1996 Ontario Population By Census Division – Females p. B-4 Table B.2a Breakdown of 1996 Ontario Population By Census Metropolitan Area – Males p. B-5 Table B.2b Breakdown of 1996 Ontario Population By Census Metropolitan Area – Females p. B-6 Table B.3a Annual Population Growth Rates for Ontario Male Population – Low Growth p. B-7 Table B.3b Annual Population Growth Rates for Ontario Female Population – Low Growth p. B-8 Table B.4a Annual Population Growth Rates for Ontario Male Population – Central Growth p. B-9 Table B.4b Annual Population Growth Rates for Ontario Female Population – Central Growth p. B-10 Table B.5a Annual Population Growth Rates for Ontario Male Population – High Growth p. B-11 Table B.5b Annual Population Growth Rates for Ontario Female Population – High Growth p. B-12 Table C.1 1996 Baseline Air Quality Data by Census Division p. C-10 Table C.2 1996 Baseline Air Quality Data by Census Metropolitan Area p. C-11 Table C.3 PM 10 Reductions with Anti-Smog Action Plan and U.S. Clear Air Act SO 2 Emission Reductions p. C-6 Table D.1 Weighted Average Percentage Increase in Hospital Admissions With 10 ppb Change in Pollutant Concentration p. D-13 Table D.2 Age-specific Illness Frequencies for Respiratory and Cardiac Hospital Admissions p. D-13 Table D.3 Illness Risks for Emergency Room Visits With a 10 µg/m 3 Change In Pollutant Concentration p. D-18 Table D.4 Illness Risks for Minor Illness Symptoms With a 10 µg/m 3 Change In Pollutant Concentration p. D-21 Table D.5 Exposure/Response Functions for Ozone p. D-27 Table D.6 Exposure/Response Functions for PM 10 p. D-28 Table E.1 Operating Cost Information for Ontario Hospitals p. E-9 Table E.2 Average Hospital and Emergency Room Costs by Census Division p. E-11 Table E.3 Average Hospital and Emergency Room Costs by Census Metropolitan ix Area p. E-12 Table E.4 Correspondence Among ICD-9 Codes and Major Case Mix Groups p. E-13 Table E.5 Resource Intensity Weights for Each Eligible Case Mix Group p. E-16 Table E.6 Correspondence Among ICD-9 Codes and Major Illness Categories p. E-21 Table E.7 ICD-9 Case Frequencies for Ontario in 1998 p. E-23 Table E.8 Weighted RIWs by Illness Category for Ontario p. E-26 Table E.9 Average Costs for a Hospital Admission by Illness Category and Age Group for Ontario Census Divisions p. E-27 Table E.10 Average Costs for a Hospital Admission by Illness Category and Age Group for Ontario Census Metropolitan Areas p. E-28 Table F.1 Average Costs for Doctor’s Office Visit by ICD-9 Diagnostic Category p. F-6 Table F.2 Average Costs Per Doctor’s Office Visit by Illness Category p. F-7 Table G.1 Calculations Used To Derive Medication Cost Coefficients p. G-5 Table G.2 Medication Costs on a Per Incidence Basis by Illness Category p. G-6 Table H.1 Estimates of the Economic Value of Premature Mortality p. H-8 Table H.2 Average Annual Health Care Consumption by Gender and Age Group p. H-9 Table H.3 Net Present Value of Health Care Savings from Premature Mortality p. H-10 Table H.4 Economic Coefficients – Value of a Statistical Life p. H-11 Table I.1 Economic Coefficients and Probabilities for Quality of Life Losses p. I-6 Table J.1 Lost Days by Illness Category and Age Group p. J-6 Table J.2 Value of Lost Working Day by Census Division p. J-9 Table J.3 Value of a Lost Working Day by Census Metropolitan Area p. J-11 Table K.1 Forecasts of Illnesses Attributable To Natural Background Levels of Ozone and Particulate Matter p. K-4 Table K.2 Forecasts of Economic Damages Attributable To Natural Background Levels of Ozone and Particulate Matter p. K-6 Table K.3 Forecasts of Total Illnesses with the Maintenance of Current Levels of Anthropogenic Ozone and Particulate Matter p. K-8 Table K.4 Forecasts of Total Economic Damages with Maintenance of Current Levels of Ozone and Particulate Matter p. K-9 Table K.5 Forecast of Avoided and Residual Illnesses Attributable to Air Pollution in 2015 With a Fully Effective Ontario Anti-Smog Action Plan p. K-10 Table K.6 Forecast of Avoided and Residual Economic Damages Attributable to Air Pollution in 2015 With Fully Effective Ontario Anti-Smog Action Plan p. K-11 [...]... range of physical and economic damages in addition to those relating to human health These impacts include damages to materials and structures, agriculture, forestry and natural ecosystems This study does not address these impacts and related economic damages Any damages to these other components of the environment are additive to the health damages estimated in this report 6 Figure 1 – Overview of Epidemiological... at hand is critical A primary purpose of this study is to bring together this complexity and to provide an efficient means for people of all sorts to gain improved understanding of air quality and related government policies in terms of the future health and well-being of Ontarians This study has focused on cardio-respiratory illnesses caused by the principal components of smog, namely ozone and air- borne... develop appropriate estimates of the economic damages relating to air pollution-induced illnesses (42) A methodology was designed for developing an integrated analytical system which would bring together the best knowledge and data on air quality, human health and economics and which would produce forecasts of expected damages (and avoided damages) relating to changes in air quality In 1999, the OMA... and economic damages attributable to air pollution This report also provides a more indepth understanding of the technical underpinnings of ICAP Estimates of health damages are included in this report No analysis is included as to what air quality policy actions are, or are not, warranted given the magnitude of damages being, and expected to be, incurred This step is vital but is outside the scope of. .. perspective, damages from premature mortality and pain and suffering can be, and should be, added to estimates of out -of- pocket economic losses in deciding on the best environmental policy Damage estimates in this report are presented for individual economic components as well as for the combined total Doing so allows separation of these different types of damages When comparing damages to the costs of pollutant... description as to how the economic value of reducing the risk of death has been estimated and used in this analysis 2.7 Treatment of Uncertainty Uncertainty about the future is a fact of life From a public policy perspective, one needs to decide how best to reduce and manage uncertainty Estimating health effects and economic damages attributable to air pollution involves a considerable level of uncertainty This... ICAP users 3.4 Health Care Resource Utilization Following is a brief description of the health care data which have been used to develop estimates of the health care costs of air pollution 3.4.1 Hospital Admission Costs An extensive hospital cost database and cost estimating procedure have been developed by the Canadian Institute of Hospital Information (CIHI) to apportion the costs of hospital treatment... population and environmental factors Key information requirements are: i) current and future air quality conditions, ii) current and future size, distribution and composition of the exposed population, iii) E/RFs for key air pollutants, and iv) economic coefficients for air pollution-induced illnesses This report describes the information which has been compiled for Ontario for estimating physical and economic. .. common in the air pollution /health effects epidemiological literature and is appropriate for public health and environmental policy analysis 2.3 Exposed Population Estimating health effects attributable to air pollution requires identifying the number of individuals exposed to air pollution in different parts of the province Some segments of the population are more susceptible to certain air pollution... hand, economies continue to grow The result often may be that increases in total air emissions outstrip initiatives to control individual emissions Evaluating the potential benefits of air quality policies requires knowledge of current air quality conditions and also estimates of how air quality is likely to change in the future given alternative courses of action and outcomes Forecasting future air . REPORT Phase II: Estimating Health and Economic Damages Illness Costs Illness CostsIllness Costs Illness Costs of ofof of Air Pollution Air PollutionAir Pollution Air. various aspects of ICAP and the forecasting of health and economic damages due to air pollution. The impacts of two pollutants (i.e., ozone and particulate