Conference Agenda

Environmental regulations targeting air pollution and chemical exposure typically generate joint reductions in multiple health risks. In environmental Cost-Benefit Analysis, these benefits are commonly valued by eliciting Willingness to Pay (WTP) for individual health risk reductions through distinct valuation surveys and aggregating the resulting estimates. This article examines whether the biases generated by such aggregation procedures remain limited in magnitude, and therefore acceptable for practical welfare assessment, when several health risks are involved. An analytical framework is first developed to explicitly characterize the different welfare biases associated with the aggregation of separate WTP measures. The analysis thus revisits the Individual Valuation and Summation (IVS) approach by formally deriving the associated bias and extending its characterization beyond the standard two-risk case. In addition, it identifies a second source of bias, referred to here as a Separate Valuation and Summation (SVS) bias, which arises when each health risk is valuated in isolation while other environmentally related risks are implicitly neglected. To assess the empirical relevance of these effects, a Pseudo-Separate Valuation framework is implemented within a single Discrete Choice Experiment. This approach is applied to 3 morbidity risks (Asthma, Chronic Kidney Disease, and Type 2 Diabetes) associated with air pollution and chemical exposure, across 6 European countries. The results indicate that IVS bias remains limited for marginal risk changes, whereas SVS bias can be substantial. They further show that total bias increases with initial risk levels and varies across countries. Overall, these findings highlight the importance of accounting for cross-risk interactions in the valuation of environmental health benefits.