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2.3.2.4. Damage Avoided (labor productivity)

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Environmental Economics Research at EPA


One of the impacts of human exposure to pollution is that people will be unable to work or that productivity on the job will fall. While day to day variation in on-the-job productivity is difficult to assess, lost time from work is recorded and potentially available to researchers. A number of EPA studies have used this type of data to test for the impact of pollution on days of work. You can see the full list of reports corresponding to this section in the benefits analysis - valuation - cost of damages avoided - productivity subview of the subject view of the Environmental Economics Report Inventory (EERI) database.

The 1977 report Oxidant Air Pollution and Work Performance of Citrus Harvest Labor (EE0029) by Crocker and Horst describes losses in earnings to a small sample of citrus harvest laborers experience due to lost work on days with high oxidant levels in their work environments. On average their earnings were reduced by two percent. An earlier draft of this report appears as Hours of Work, Labor Productivity, and Environmental Conditions: A Case Study (EE0287). In 1985 the same authors, along with Adams and Thanavibulchai issued a report titled The Value of Air Pollution Damages to Agricultural Activities in Southern California (EE0278F) that includes three essays, one of which summarizes the citrus worker study.

Methods Development for Assessing Air Pollution Control Benefits Vol I, Experiments in the Economics of Air Pollution Epidemiology (EE0271A), by Crocker, Schulze, Ben David, and Kneese (1979), presents and estimates a model to value labor productivity and consumer losses due to air pollution-induced mortality and morbidity. The study focuses on an aspect of consumer choice. Individuals adapt to air pollution in part by demanding more medical services. Part of the incremental demand may be ameliorative and part restorative but no attempt at division is made. In the econometric effort, a two stage least squares model is developed to account for the medical demand adaptation. Mortality and morbidity were positively correlated with air pollution measures and with physicians per capita. Doctors did not increase death and illness. Rather, residents of more polluted areas demanded more medical care. A second equation was included in the regression analysis to capture the increased demand for doctors in more polluted areas.

Chapter 3 of the report Valuing Chronic Morbidity Damages: Medical Costs, Labor Market Effects, and Individual Valuations (EE0224) by Krupnick and Cropper estimates labor market effects of chronic heart and lung disease. For their sample, having a heart attack between the ages of 45 and 54 lowered future earnings by about 14%. Having chronic bronchitis reduced earnings an average of 15% and having asthma reduced future earnings by 13%.

Chestnut, et al., Heart Disease Patients' Averting Behavior, Costs of Illness, and Willingness to Pay to Avoid Angina Episodes - Final Report (1988) (EE0010A,B) found that the lost wages due to illness and related symptoms of angina averaged $9,531 per person. To this add out-of-pocket costs of $256 and third-party costs (insurance) of $4,523 and one arrives at a per person annual cost of this illness of $14,359.


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