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The Economic Costs of Environmental Diseases and Disabilities.

By Kate DaviesRachel's Democracy & Health News #836, Jan. 5, 2006

Introduction It has been said that economics is the only subject in which two people can get a Nobel Prize for apparently contradictory research. Joking aside, economics is quite literally a deadly serious business. Especially when it comes to the health effects of toxic chemicals.

Environmental health advocates have long claimed that economics, and more specifically the high costs of implementing environmental protection measures, have been used to justify the continued use of many toxic chemicals. They assert that government and industry are reluctant to protect public health from exposure to toxic chemicals, if it means implementing measures that would cost too much money and reduce profitability. For example, lead based paint was banned in some European countries as early as 1921 because of health concerns, but it was not outlawed in the US until the 1970s. Similarly, information on the risks of leaded gasoline was available for many years before regulatory action was taken. Today, the health risks of asbestos, mercury and many other toxic chemicals are generally acknowledged by the scientific community, but these substances continue to be used and released into the environment.

Environmental health policy decisions focus on the costs of taking action to protect public health, while often ignoring the costs associated with inaction. In particular, the continued use of toxic chemicals has been associated with many chronic diseases and disabilities, including cancer, birth defects, and learning and developmental disabilities. These and other chronic diseases now cause major limitations in daily living for more than one in every ten Americans and account for more than 70 percent of the $1 trillion spent each year on health care in the US . Although exposure to toxic chemicals is only one factor in chronic disease causation, environmental health policy decisions should take account of both sides of the metaphorical coin -- both the costs of taking action to protect public health, and the costs of inaction and continued exposures to environmental hazards.

The idea that the health costs of environmental hazards should be considered in policy decisions is not new. About 150 years ago, Charles Dickens argued that the high cost of typhus in London (440,000 pounds in 1848 alone) should be considered in decisions about whether to implement new public health measures. He commented: "This cold- blooded way of putting the really appalling state of the case is, alas, the only successful mode of appealing.... His heart is only reached by his pocket." Placing an economic value on people's suffering may be "cold-blooded", but it is necessary because environmental health policy decisions are based primarily on an economic metric. Nevertheless, monetary valuations can never take account of the psychological and emotional costs of disease to patients or to their families, friends and communities.

THE ECONOMIC COSTS OF ENVIRONMENTAL DISEASES & DISABILITIES So what are the economic costs of environmental diseases and disabilities today? This is a tricky question because it is difficult to be precise about the proportions of different diseases and disabilities attributable to environmental exposures, and because of the challenges of estimating the economic costs of health conditions.

But in the past few years, a growing consensus has emerged on the fractional amounts or percentages of some common diseases and disabilities generally linked to exposure to environmental contaminants. This is a result of increasing knowledge about gene- environment interactions in disease causation, the determinants of health, and the health effects of toxic chemicals. At the same time, health economists have made significant improvements in "cost of illness" models for most common health conditions. These models now include direct healthcare costs, such as hospitalization, physician and nursing services, prescription medications and home care, and indirect costs, such as lost productivity and costs associated with special educational and social services.

These advances are paving the way for the development of sophisticated estimates of the costs of diseases and disabilities attributable to environmental contaminants. Using cautious assumptions about health and related costs, the environmentally attributable fractions of a limited number of health conditions, and disease rates in populations, researchers are beginning to generate conservative estimates of the costs of diseases and disabilities attributable to environmental contaminants.

The studies on the health and related costs of environmental pollutants fall into three general categories. Early studies focused on the costs of lead exposure. Key among these are Schwartz's and Salkever's estimates of the earnings benefits from reduced childhood exposure to lead. More recently in 2002, Grosse et al. were the first to estimate the national economic gains resulting from increased worker productivity associated with reduced lead exposure since the 1970s. Subsequent studies on the costs of lead exposure have gone beyond looking at productivity and earnings, and have estimated costs for special education and juvenile justice. Most recently, Trasande et al. have calculated the costs of mental retardation attributable to exposure to another heavy metal, methyl mercury.

The second type of study to estimate the health costs of environmental pollution has focused on the costs of air pollution. An early study in Pennsylvania estimated the hospitalization costs resulting from air pollution and a major study conducted by the Ontario Medical Association used a software model to estimate that air pollution costs in the Province amounted to more than $1 billion a year in hospital admissions, emergency room visits, and absenteeism .

The third type of study has focused on multiple disease outcomes, especially in children. The first major national study considered childhood asthma, cancer, neurobehavioral disorders, and lead poisoning, and it estimated that the environmentally attributable costs of these diseases and disabilities were $55 billion. This study was followed by similar studies in Massachusetts, Washington, and Montana.

These studies are important because they provide estimates of economic costs that have been traditionally externalized from environmental health policy decisions. Classic examples of costs usually externalized from decision making include the costs of the raw goods and services provided "free" by nature, such as: trees for lumber; fish and agricultural crops for food; oil, coal and hydro-electric power for energy; and air and water for industrial processing. Then there are free waste disposal services provided by nature, also usually externalized from decision making. These costs include water purification functions provided by wetlands and other aquatic ecosystems, and the ability of micro-organisms to break down some environmental pollutants into less harmful substances. The emerging discipline of ecological economics is beginning to estimate the costs of these "free" goods and services provided by nature. This is a useful way of pointing out the need to take account of all costs in environmental policy decisions. The recent estimates of the health and related costs of environmental diseases and disabilities add to this emerging body of knowledge.

COST BENEFIT ANALYSIS So how can information on the health and related costs of environmental diseases and disabilities be internalized into environmental health decision-making? One way is to incorporate it into cost-benefit analyses. This can be done by seeing these costs as economic benefits that would accrue if exposures were eliminated or reduced. Indeed, one recent study has estimated the economic benefits of public health improvements attributable to air pollution regulations in the US . Cost-benefit analysis can be most useful to policy-makers if it includes both types of information -- the costs of protecting environmental health, and the health and related benefits of doing so. To be comprehensive cost-benefit analyses should include all costs and benefits to public health and to industry, not just some.

A related issue is that the health and related costs of the continued use of toxic chemicals are borne mostly by individuals, communities and ultimately by society as a whole, rather than by those who are responsible for producing, using, disposing of, and releasing toxic chemicals into the environment. In contrast, the economic benefits of the continued use of toxic chemicals go mostly to individual companies. Hence, there is a disparity between who benefits and who pays. This is a common problem with externalized costs: those who pay the price are usually different from those who reap the benefits.

THE BOTTOM LINE Incorporating health costs into environmental health cost benefit analyses and other policy processes would provide decision makers with more complete, balanced and accurate information. This would strengthen decision making processes considerably. Indeed, a recent study found that environmental health policy makers identified information on the links between environmental health and the economy as one of their key needs. Some may argue that we can never know the exact costs of environmental diseases. This is a valid point, but even if the recent conservative estimates are inaccurate by a significant margin, the estimates show that the costs of environmental diseases and disabilities run into tens of billions of dollars a year in the US, possibly outweighing the costs of environmental protection. Moreover, the estimated costs of environmental protection measures are themselves based on many assumptions that are unlikely to be completely precise or accurate.

What it comes down is this: The economic costs of environmental diseases and disabilities are very significant and they are largely preventable. By taking action to reduce or eliminate exposures to toxic chemicals, the US could save billions of dollars a year in health and related costs and significantly improve public health.

Kate Davies MA DPhil Core Faculty, Environment & Community Associate Director Center for Creative Change Antioch University Seattle

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