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Unformatted text preview: EC 145E Environmental Economics VCI Dr. Bresnock There are 2 main techniques to measure the benefits of improvements in environmental quality: (a) calculating the damages directly with the emissions damage function , and (b) estimating the willingness-to-pay for improvements in environmental quality. (1) Physical Aspects- in order to calculate the damages associated with emissions the physical circumstances that lead to such damages must be calculated first . This process has 5 steps: (a) measure the emissions , (b) use dispersion models to determine the ambient quality that results from the emissions, (c) estimate the human exposure to the ambient quality found in (b) , (d) estimate the physical impacts of (c) , and (e) estimate the $ damages associated with the ph y sical impacts in (d) . The most important damage caused by environmental pollution relates to human health , i . e. increased mortality and morbidity , increases in diseases . This is complex analysis because of other factors besides ambient pollution that affect human health. (a) Health Costs- "cost of illness " (COI) analysis estimates the increased medical and other costs associated with pollution-related illnesses. These estimates are direct (i . e . costs of medical visits , medications,) and indirect (i.e. lost productivity , lost work time). Benefits of pollution control are reducing these health costs , and are considered a minimum , or lower- bound , on assessing these benefits . Environmental Economics Lecture 4 Creating "health indices", assigning values to different he a lth states, and then monetizing differences in these indices are an alternative to the COI method, but they do not rely on willingness-to-pay as a measure of value. (b) Effects of Pollution on Production Costs - reduced yields of crops, timber, fish, and effectiveness of workers, can lead to increases in production costs as a result of pollution. Ex . costs to c lean up water, decontaminate soil s , and sluggish worker performance. In all of these cases , pollution ~ i the MPC (Marginal Private Costs) of the affected firms. ; ; . ,. \- . 1- , O 'vv\ .. O- f v J o . /' *-- v " I ( J ' ) r ' ! ,- '- l . ' . , ,: . J- ' _ j \ ) ( C l \ Oz . (c) Materials Damages - damages to exposed surfaces, metal surfaces of stone and machinery, statues, paint , etc . ~ i maintenance and more rapid replacement. Similar analysis as (b). Some of these damages are aesthetic and may be captured as reduced visual values in land and property values. Any costs associated with s witching to other materials that are less likely to deteriorate should also be included. "Dose-response" analysis can be performed to calculate the extent of the deterioration associated with deterioration resulting from different amounts of pollutants....
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