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INSTITUTE OF MEDICINE
COSTS OF ENVIRONMENT-RE~ATED
HEALTH EFFECTS
A PLAN FOR CONTINUING STUDY
Report of a Study
by the Committee for a Planning Study
for an Ongoing Study of Costs
of Environment-Related Health Effects
January 1981
National Academy Press
Washington, D.C.
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NOTICE The project that is the subject of this report was approved
by the Governing Board of the National Research Council, whose
members are drawn from the Councils of the National Academy of
Sciences, the National Academy of Engineering, and the Institute of
Medicine. The members of the committee responsible for the report
were chosen for their special competencies and with regard for
appropriate balance.
This report has been reviewed by a group other than the authors
according to procedures approved by a Report Review Committee
consisting of members of the National Academy of Sciences , the
National Academy of Engineering, and the Institute of Medicine.
The Insti tote of Medicine was chartered in 197() by the National
bcaclemy of Sciences to enl ist di~tingui shed members of the
appropriate professions in the examination of policy matters
pertainin.g to the health of the public. In this, the Institute acts
under both the Academv's 1863 congressional charter responsibility to
be an advisor to the federal government, and its own initiative in
identi tying i ssues of medical care, research, and education.
This study was supported by the National Center for Health Statistics
of the Department of Heal th and Human Servi ces, Contract No.
282-78-0163, T.C. 12
2101 Constitution Avenue, N.W.
Washington, r.C . 20418
202/389-~87
Pub l i ca t i on IOM-8 l -01
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INSTITUTE OF MEDICINE
PLANNING STUDY FOR AN ONGOING STUDY OF COSTS OF
ENV IRONMENT-RELATED HEALTH EFFECTS
COMMITTEE POSTER
CHAIRMAN
Kenneth J. Arrow, Ph.D.
Professor of Economi cs
Professor of Operations Research
Stanford Univers i ty
Stanford, Cal i forni a
MEMBERS:
Theodore Cooper, M.D., Ph.D.
Execut ive Vice Presi dent
The Upj ohn Company
Kalamazoo, Michigan
Ralph C. d'Arge, Ph.D.
Professor of Economics
University of Wyoming
Larami e, Wyomi ng
Philip J. Land rigan, M.D.
Director, Division of Surveillance,
Hazard Evaluation and Field Studies
National Institute for Occupational
Safety and Health
Cincinnati, Ohio
Alexander Leaf, M.D.
Chief of Medical Services
Massachusetts General Hospital
Boston, Massachusetts
Joshua Lederberg, Ph.~.
President
The Rockefeller University
New York, New York
Paul A. Marks, M.D.
President
Memorial Sloan Kettering
Cancer Center
New York, New York
Frederick Mosteller, Ph.D.
Professor and Chairman
Department of Biostatistics
Harvard School of Public Health
Boston, Massachusetts
Evelyn F. Murphy, Ph.D.
Department of Urban Studies
Massachusetts Institute of
Technology
Cambridge, Massachusetts
_ ~ ~ ~ _
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Robert F. Murray, Jr., M.D.
Senior scholar-in-residence
Institute of Medicine
(July 1980 to June 1981)
and
Professor of Pediatrics,
Medicine and Oncology
Chief, Division of Medical
Genetics
Howard University College of
Medicine
Washington, D.C.
Don K. Price
Professor of Government
Kennedy School of Government
Harvard University
Cambridge, Massachusetts
Frederick C. Robbins, M.D.
President
Institute of Medicine
National Academy of Sciences
Washington, D.C.
(Beginning October 1980)
Dean
School of Medicine
Case Western Reserve University
Cleveland, Ohio
(Prior to October 1980)
Anne A. Scitovsky, M.A.
Chief, Health Economics Division
Palo Alto Medical Research
Foundation
Palo Alto, California
Irving J. Selikoff, M.D.
Professor of Community Medicine
Director, Environmental Sciences
Laboratory
Mount Sinai School of Medicine
New York, New York
Herman A. Tytoler, M.D.
Professor of Epidemiology
School of Public Health
University of North Carolina
Chapel Hill, North Carolina
Arthur C. Upton, M.D.
Professor and Chairman
Department of Environmental
Medicine
Director, Institute of
Environmental Medicine
New York University Medical
Center
New York, New York
Richard Zeckhauser, Ph.D.
Professor of Political Economy
Kennedy School of Government
Harvard University
Cambridge, Massachusetts
—~ v—
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TpSTITL~E OF MEDICINE
President
David A. Hamburg, M.D.*
Frederick C. Bobbins, M.~.**
STAFF
Consultant
Elena O. Nightingale, 'l.D., Phil., Senior Program Officer;
Director,* Division of Health Promotion and Disease Prevention
Vicki Weisfeld, M.P.~., Acting Director,** Division of Health
Promotion and Disease Prevention
Barbara Mandu l a , Ph . ~ ., Study Di rec tar
Enriqueta Bond, Ph.D., Senior Staff Officer
Mary Cureton, M..., Pesearch Associate
Allyn Mortimer, Research Assi stant
Constance Shuck, Secretary
Alan A. Carber, National Bureau of Economic Pesearch, gala Alto,
Cal ~ forn i a
Additional assistance from:
Frederic Kass , J.D., Cambridge Research Institute, Cambridge,
Massachusetts ; Michael Stoto, Ph.~., Harvard University,
Cambridge, Massachusetts
Acknowledgment
In addition to appreciating the contributions of the many
persons and organizations listed in the Work of the Committee
(Appendix G), the Institute of Medicine especially thanks
Jack Feldman, Thomas Hodgson, and Dorothy Rice of the National Center
for Health Statistics for providing information and valuable guidance
throughout the study.
*Prior to October 1980
**Beginning October 1980
—v—
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NATIONAL ACADEMY OF SCIENCES
OFFICE OF THE PRESIDENT
2101 CONSTITUTION AVENUE
WAS - INGTON, C). C. 204~8
January 20, 1981
The Secretary
Department of Health and Human Services
Washington, D. C. 20201
Dear Mr. Secretary:
I am pleased to transmit a report entitled "Costs of Envi-
ronment-Related Health Effects: A Plan for Continuing Study,"
prepared in our Institute of Medicine by the Committee for a
Planning Study for an Ongoing Study of Costs of Environment-
Related Health Erefects. This planning study was undertaken as
an initial response to Pubic c Law 95-623, the Health Services
Research, Health Statistics, and Health Care Technology Act
of 1978, Section 7 of which calls for the Department and the
National Academy of Sciences, acting through the Institute of
Medl cone and other appropriate units, to conduct an ongoing
study that would provide estimates of the "reduction in health
costs which would result from each incremental reduction" in
environmental hazards caused by human activity.
The report of this planning study, which was chaired by
Professor Kenneth J. Arrow of Stanford University, is a thorough
and thoughtful document explicitly directed to the terms of the
charge described in Section 7 of Public Law 95-623; it outlines
what will be required to make a best faith ef fort to achieve the
goals envisioned in the Act, and fairly represents some of the
difficulties in so doing.
In transmitting their report, I f ind it necessary to of fer
two comments.
(1) Section 7 specifies that ''The Secretary and the National
Academy of Sciences (acting through the Institute of Medicine and
other appropriate units) shall, jointly and in cooperation with
the Administrator of the Environmental Protection Agency, the
Secretary of Labor, the Consumer Product Safety Commission,
the Council of Economic Advisers, the Council on Wage and Price
Stability, the Council on Environmental Quality, and Ether
—Yi—
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The Secretary
January 20, 1981
Page Two
entities of the Federal Government which the Secretary determines
have the expertise in the subject of the study prescribed by this
paragraph, conduct, with funds appropriated under Section 308(i)~2),
an ongoing study of the present and projected future health costs
of pollution and other environmental conditions resulting from
human activity...."
Although my colleagues and I deeply appreciate the confidence
in this institution thus expressed by the Congress, we consider
the proposed arrangement to be inappropriate. This Academy is
not a Federal agency. It is a private body albeit chartered by
the Congress to serve, in effect, as an ally of the government.
Our role is advisory--not operational. The very genius of the
Act by which the Academy was chartered is that it provided, for
the government and for the American people, an authoritative
independent voice on those matters within its areas of competence,
free of political considerations. To convey to the Academy, with
respect to a specific activity, responsibility and authority co-
equal with that of the Department and an array of other Federal
agencies is both to give to the Academy an inappropriate authority
and to raise the possibility that, in such instance, our indepen-
dent voice may be lost. An Academy committee functioning in
concert with representatives of a series of Federal agencies
might well become but one component of what is, in effect, an
interagency committee of the Executive Branch.
Accordingly,
_ this will propose that, as arrangements are
formulated for the future of the ongoing study mandated by the
Act, the Academy function in a manner more suitable to its role
in our national life. For example, we could envision an Academy
committee which would offer to the Department a preliminary plan
for the first phase of the ongoing study, and which would have
suitable opportunity to comment on the final design of the study
and any subsequent modifications as they are developed by the
Department and other agencies. The Academy committee would be
kept informed of major developments in the course of the study
and would provide, to the Department and to the Congress, con-
current but independent formal commentary on the biennial reports
to be prepared by the Department as stipulated in the Act.
I sincerely hope that the Department will join the Academy
in seeking, by appropriate routes, to secure approval of such an
arrangement by the Congress and by such instrumentalities of the
Executive Branch as may be required.
—vii—
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The Secretary
January 20, 1981
Page Three
(2) The language of the Act indicates that it was the intent
of Congress that the ongoing study should (a) attempt to establish
the magnitude of the insults to the public health that arise from
diverse environmental factors and, further, should (b) attempt to
establish the costs, in economic terms, of those insults. It is
apparent from the present report, from the history of the Act. and
from a voluminous relevant literature including
_ various reports
from this Academy, that even the first part of this charge,
(a) above, represents a difficult and remote goal, albeit impor-
tant and highly worthy.
_ — ~
In accord with the sentiments of the American people, the
Congress has put in place a series of Acts intended to achieve
maj or ~ mprovements in air and water quality, to protect the food
supply from noxious contaminants, and to protect the American
people from environmental hazards in the work place, the school-
room, and the home. These actions were taken in awareness of the
existence of diverse hazards but without definitive knowledge of
the magnitude of those hazards. That is the gap which the ongoing
study is intended to fill. But the effort required is great, and
there is no guarantee of success. In most areas of concern, the
uncertainties involved in making such estimates at this time are
huge, perhaps orders of magnitude. And, in such instances, it is
not necessarily true that the best available "guesstimate" is
better than none--it may be seriously misleading. Only in a few
specific instances do reasonably useful data appear to be avail-
able, but these constitute a minor fraction of the total problem.
Given reliable estimates of the magnitude of the burden of
disease and illness imposed by environmental factors, one might
proceed to estimate the economic costs thereof, were there also
available an agreed~upon calculus for such procedures. But such
is not yet the case; indeed the uncertainties inherent in
current methodology to this end seem as great again as those
in estimating the health effects of major environmental systems.
To multiply these two sets of uncertainties and offer estimates
of costs, in dollars, could, if taken literally, serve only to
confuse the American public, no matter how well intentioned the
attempt to inform. Accordingly, it would appear wise to attempt
these analyses as essentially independent exercises, reporting
the results separately. This would free the responsible group
to develop more sophisticated methodologies appropriate to the
cost estimates, to address their calculations only to those
-viil-
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The Secretary
January 20, 1981
Page Four
specif ic environmental hazards for which the health eff ects are
learned to an acceptable degree of certainty and, as emphasized
in the present report, to present each cost estimate with an
explicit statement of the associated range of. uncertainty.
Admittedly, this large lacuna in understanding would continue
to leave us, for some time, without a significant reference
point. The costs of pollution abatement, for example, can be
very large, and it is certainly not unreasonable to ask how those
costs relate to the costs, in dollars, of not taking such actions,
viz., the economic costs of unmitigated damage to the public
health from environmental hazards. Yet, as the Act recognized,
that is the circumstance in which the nation finds itself; that
question, today, has no reasonably reliable answer. The costs of
presumably protective actions, already mandated; can be reckoned;
the magnitudes of the resultant health benefits, and their
economic equivalents, in dollars, are largely unknown. However,
in matters of public policy, this circumstance is not unusual.
Our nation does not price-out the dollar value of the benefits of
national security when appropriating funds to the Defense Depart-
ment; it does not price-out the economic value of a national
park; it does not price-out the economic benefits of passenger
safety in appropriating funds to the Federal Aviation Authority ;
indeed, it does not price-out the economic values of a host of
social and educational programs . Instead, it is the norm of
political behavior to reckon benefits within the framework of a
general set of subjective public value judgements rather than out
of hard knowledge of their dollar equivalents--which are rarely
available in any case. We ask what kind of country we want ours
to be, and we ask what we can afford--and act accordingly.
This is not to argue against the proposed attempt to estimate
the economic costs of the impact on our health by environmental
factors; it is only to ask that reports of these mandated efforts
be made public only as they can rest on both a public health data
base and an economic calculus that are reasonably acceptable.
Meanwhile, the primary task of the ongoing study is to identify
and quantify those hazards to human health posed by the environ-
ment. When these have been established to an acceptable degree
of certainty, a rational government will surely arrange that the
extent of our various responses will, in a general way, relate to
the relative magnitudes of the various hazards. If the ongoing
study can achieve that end, the nation will have been richly
—Six—
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The Secretary
January 20, 1981
Page Five
rewarded. If, in due course, the study also produces reasonably
reliable estimates of the economic costs of the health effects of
environmental hazards, we may learn to respond yet more rationally.
Sincerely yours,
bin
Philip Handler
President
Enclosure
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FOREWORD
CHAIRMAN ' S PREFACE
SUMMARY
CHAPTER 1.
INTRODUCTION
CONTENTS
Approach f or the Ongoing S tudy
Improving Information for the Ongoing Study
Conclusion
Goals of the Planning S tudy
Historical Background: Estimating Benef its
of Environmental Regulations
Information Needed by the Ongoing Study
Early Phases of the Ongoing Study
Usefulness of the Ongoing Study
REFERENCES
CHAPTER 2.
DATA RELATED TO ENVIRONMENTAL HAZARDS AND HUMAN EXPOSURE
Existing Studies
Sources of Hazards, Types of Data Needed
Environmental Monitoring
Exposure
REFERENCES
CHAPTER 3.
INFORMATION NEEDED TO ASSESS AND QUANTIFY HEALTH EFFECTS
RISK EXTRAPOLATION FROM NON-HUMAN DATA
Short-term Tests
Animal Tests
Risk Extrapolation
CLINICAL STUDIES
EPIDEMIOLOGIC STUDIES
Types of Studies
Surveillance
Occupational Data
Effects of Acute Environmental Exposures
Susceptible Populations
Effects of Environmental Agents on Human Reproduction
REFERENCES
—xi—
Page
xv
xvii
1
3
8
14
15
15
17
19
27
30
31
37
37
39
41
43
45
49
51
51
52
52
53
54
54
59
60
64
66
69
71
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CHAPTER 4.
COSTS OF HEALTH EFFECTS
Costs Listed in Public Law 95-623
Estimating Costs of Illness and Disease by the
Output-Accounting Method
Output Accounting Applied to Costs of Health
Effects of Environmental Hazards
The Willingness-to-pay Approach to Costs of Disease
Conclusion
REFERENCES
CHAPTER 5.
ISSUES RELATED TO ADMINISTRATION AND COORDINATION
ISSUES AT THE FEDERAL LEVEL
Coordination Among Federal Agencies
The Process of Administration of the Ongoing Study
COORDINATION AMONG VARIOUS GROUPS
State and Local Government Involvement
Industry and Labor
Public Interest Groups
Private Foundations and Voluntary Health Organizations
Int erna t tonal Organiza Lions
EDUCATION AND INFORMATION DISSEMINATION
REFERENCES
CHAPTER 6.
CONCLUSIONS AND RECOMMENDATIONS
PURPOSES AND PROCEDURES OF THE ONGOING STUDY
The Early Years of the Ongoing Study
The Biennial Reports
Administrative Arrangements for the Ongoing Study
DATA AND METHODOLOGIES TO AS SOCIATE EXPOSURES AND
HEALTH EFFECTS
Existing Data and Data Systems
New Data and Data Systems
ESTIMATING COSTS
Direct Costs
Indirect Costs
Willingness-to-pay Estimates
Costs of Pain and Suffering
ISSUES RELATED TO COORDINATION AND PLANNING
Planning
CONCLUSION
—xli—
77
82
85
93
96
100
102
105
106
106
114
119
119
122
123
124
125
126
127
133
133
138
142
144
148
148
150
155
157
160
161
162
162
163
166
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APPENDIXES
Appendix A: Public Law 95-623, text of Sections 7 and ~ A-1
Appendix B: Chronology of Maj or Federal Laws Relating to
Environmental Quality and Health B-1
Appendix C: Table of Known and Suspec ted Environment-Rela~ced
Health Ef fects
Appendix D: Listing of Federal Coordinating Groups Concerned
with Environmental Health and Toxic Substances D-1
C—1
Appendix E: Table E-1. Approximate Costs Associated with
Some Epidemiologic Studies E-1
Appendix F: Table F-1. Some Inherited Disorders that }lay
Influence Individual Susceptibility to Specif ic
Environmental Agents F-1
Appendix G: Work of the Committee G-1
List of Background Papers Prepared for
the Committee G-6
Appendix H: Abbreviations H-1
—xiii—
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FOREWORD
This report, Costs of Environment-Related Health Effects. ~
Plan for Continuing Study, was prepared in response to Public Law
-
95-623, wki ch requested that a study of costs of environment-related
health effects be carried out TV the National Academy of Sciences
(acting through the Institute of Medicine and other units), and
vari ous federal agent ies .
It i s my opinion that this report clear' y states the
di¢£icu'ties that are inherent in the task proposed by Congress. It
suggests ~ practical and logical approach that, if implemented, would
provide useful information to those responsible for deciding matters
of public policy. At the same time, the approach would expand our
knowledge concerning envi ronmental factors and hea 1 th and thei r
ecor~omi c consequences .
The goal that Congress had in mind in requesting this study,
that is, documenting the costs in economic terms of the health
effects resulting from environmental pollution, is of great
importance. Although this coal is not at present achievable, it is
well worth striving towards.
The commi t tee has pointed cut clearly the limi Cations of the
science data base avai fable to support causal relationships between
environmental factors and heal th. They have suggested ways to
improve the available data and methods, placing particular importance
on the need for proper linkage and utilization of the many relevant
data Bye tems now i n exi stence . The economi c es timates are limi ted by
the paucity of avai fable health data. Even when these data are
avai table, however, there are methodological and theoretical problems
that require active research in order to develop better ways to use
the data.
A framework Is proposed for the ongoing study that would provide
a mechanism for working toward the goal of P.L. 95-623 in a stepwise
fashion that would continually advance both our theoretical and
practical knowledge. However, the overall goals of the congressional
request cannot be achieved in the near future. The ongoing study
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must be continued over a period of many years if it is to provide the
information requested by Congress. A short-term effort would be of
limited value.
The committee also has commented on administrative arrangements
for the continuing study and the appropriate relationship between the
TOM/NAS and government for conduct of the continuing~study. The
committee recommends that the IOM/NAS maintain its traditional
advisory role while participating actively in the continuing study.
In summary, I believe that the committee and staff have done an
outstanding job in dealing with a subject that is complex and
difficult but of increasingly great import to the nation.
Frederick C. Robbins, M.D.
President
Institute of Medicine
—xvi—
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CHAIRMQN'S PREFACE
The evolution of environmental policy has reflected the many
pressures inherent in issues with complex and diverse ramifications.
On the one hand, there are the perceptions of adverse health effects,
illness and mortality, and other environmental degradations, of
visibility, noise, smell, and injury to fellow-species associated
with the release of chemicals and other pollutants into the air and
water used by the populace at large and more intensely into the
Occupational environment. On the other hand, there are the easily
visible costs of complying with environmental regulations designed to
control the flow of pollutants into the ambient media restrictions
on the location and volume of certain kinds of production, use of
more expensive material inputs, and purchase of pollution-control
equipment.
At some point, the balancing of the disutilities of pollution
against the production costs in protecting against them becomes a
major aspect of policy formation. It is as part of this debate that
the United States Congress enacted Public Law 95-623, the Health
Services Research, Health Stati sties, and Health Care Technology Act
of 1978. Congress recognized that information on the health effects
of environmental alterations due to human activi ty was inadequate to
the needs of rational decision making. In Section 7 of the law, the
(now) Department of Health and Human Services and the National
Academy of Sciences, acting through the Institute of Medicine, are
asked to conduct an ongoing study, with biennial reports, to estimate
the relevant health effects and their costs and to provide advice on
improving the data needed.
The Institute of Medicine has prepared this planning study to
set guidelines for the conduct of the ongoing study. We saw the
charge basically as specifying the contents of an information system
useful for decision making. It was not to be a complete
specification of the decision process in any case, for the law
prescribes only the estimation of health effects and costs.
The task of the commi t tee was to survey exi sting methods of
gathering the relevant information and proposing additions to the
—xvii—
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data system. The info`~.ation must be relevant to the decisions that
will and can be taken; but also it must be feasible to obtain. The
data to be caller ted must especially be evaluated for their abi li ty
to cast light on red ations between exposures to pollutants and the
resulting health effects. Any decision tC? change, for example, air
quality standards requires an evaluation of the resulting effect on
mortality and morbidity. Existing data are usually collected with
different aims in view. Though valuable inferences can sometimes be
made from them, new types of data can be more powerful in detecting
such relations.
Pollution or other man-made alterations in the environment
affect health through a two-staze process (1) the pollution enters
an ambient medium to which human beings are exposed 5 (' ~ the exposure
causes a response in terms of health effects. For comparison with
production costs needed for decision making, a third step is needed,
an equivalence between health effects and costs in terms of
resources. The study ouickly-found that data on all three stages
were sadly lacking, and the bulk of the report concerns itself with
analysis and recommendations for better information. However, our
di scussion of the first stage, the impact of sources of environmental
hazards on human exposures, must be regarded as inadequate, due to
lack of time and of relevant expertise on the committee. Further
study of this area is of high priority.
With regard to the other stages, considerations of feasibility
and of relevance to decision making about externalities led to
recommendation of severe restriction on the scope of the ongoing
study. Some of the reviewers of this study feel we may sti 11 have
been too optimistic about the possibilities for useful results. We
do urge that the uncertainty inherent in all data used in
environmental decision making (indeed, in most data on which public
and private decisions are based) be explicitly recognized. Even if
all our recommendations are accepted and prove as useful as we think
they will, there will be large uncertainties. It is important to
recognize them, both to motivate the search for better data and more
accurate relationships and to influence the kind of decisions that
are made, for rational behavior under uncertainty would lead to
decisions qualitatively as we] 1 as quantitatively different from
those under certainty.
The- notion of a continued ongoing study includes, as we have
recommended, evolution of the data system based on continued
self-appraisal. Our report will be most successful if it is soon
superseded .
Kenneth J. Arrow, Chairman
Committee for a Planning Study
for an Ongoing Study of Costs
of Environment-Pelated Health Effects
—xviii—
