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Canada Wide Standard for Particulate Matter and Ozone: Cost‐Benefit Analysis Using a Life Quality Index

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  • Mahesh D. Pandey
  • Jatin S. Nathwani

Abstract

The adverse impacts of particulate air pollution and ground‐level ozone on public health and the environment have motivated the development of Canada Wide Standards (CWS) on air quality. In cost‐benefit analysis of air‐quality options, valuation of reduction in mortality is a critical step as it accounts for almost 80% of the total benefits and any bias in its evaluation can significantly skew the outcome of the analysis. The overestimation of benefits is a source of concern since it has the potential of diverting valuable resources from other needs to support broader health care objectives, education, and social services that contribute to enhanced quality of life. We have developed a framework of reasoning for the assessment of risk‐reduction initiatives that would support the public interest and enhance safety and quality of life. This article presents the Life Quality Index (LQI) as a tool to quantify the level of expenditure beyond which it is no longer justifiable to spend resources in the name of safety. It is shown that the LQI is a compound social indicator comprising societal wealth and longevity, and it is also equivalent to a utility function consistent with the basic principles of welfare economics and decision analysis. The LQI approach overcomes several shortcomings of the method used by the CWS Development Committee and provides guidance on the compliance costs that can be justified to meet the Standards.

Suggested Citation

  • Mahesh D. Pandey & Jatin S. Nathwani, 2003. "Canada Wide Standard for Particulate Matter and Ozone: Cost‐Benefit Analysis Using a Life Quality Index," Risk Analysis, John Wiley & Sons, vol. 23(1), pages 55-67, February.
    • Handle: RePEc:wly:riskan:v:23:y:2003:i:1:p:55-67
    DOI: 10.1111/1539-6924.00289
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    Cited by:

    1. Huai Su & Jiang Hu & Zhi Wen, 2013. "Optimization of reinforcement strategies for dangerous dams considering time-average system failure probability and benefit–cost ratio using a life quality index," Natural Hazards: Journal of the International Society for the Prevention and Mitigation of Natural Hazards, Springer;International Society for the Prevention and Mitigation of Natural Hazards, vol. 65(1), pages 799-817, January.
    2. M. Pandey, 2004. "Response to Letter to the Editor," Risk Analysis, John Wiley & Sons, vol. 24(2), pages 307-309, April.
    3. Rackwitz, Rüdiger, 2006. "The effect of discounting, different mortality reduction schemes and predictive cohort life tables on risk acceptability criteria," Reliability Engineering and System Safety, Elsevier, vol. 91(4), pages 469-484.
    4. Shih, Yi-Hsuan & Tseng, Chao-Heng, 2014. "Cost-benefit analysis of sustainable energy development using life-cycle co-benefits assessment and the system dynamics approach," Applied Energy, Elsevier, vol. 119(C), pages 57-66.
    5. Xi Du & Zhijiao Zhang & Lei Dong & Jing Liu & Alistair G. L. Borthwick & Renzhi Liu, 2017. "Acceptable Risk Analysis for Abrupt Environmental Pollution Accidents in Zhangjiakou City, China," IJERPH, MDPI, vol. 14(4), pages 1-13, April.
    6. David M. Stieb & Alan J. Krupnick & Wiktor L. Adamowicz & Paul De Civita & Richard T. Burnett & Barry Jessiman, 2004. "Letter to the Editor," Risk Analysis, John Wiley & Sons, vol. 24(2), pages 305-306, April.
    7. Christoph M. Rheinberger & Michael Bründl & Jakob Rhyner, 2009. "Dealing with the White Death: Avalanche Risk Management for Traffic Routes," Risk Analysis, John Wiley & Sons, vol. 29(1), pages 76-94, January.

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