Reaching out for health benefits

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There has been much debate regarding the health benefits of implementing the European Commission's proposed new chemicals policy. Walter Krämer, Michael Nasterlack and Andreas Zober examine how those benefits were calcuated

There has been much debate regarding the health benefits of implementing the European Commission’s proposed new chemicals policy. Walter Kr?mer, Michael Nasterlack and Andreas Zober examine how those benefits were calcuated

Imagine, an alien asks you over the tip of his plasma gun how much you would pay if he’d spare your life: you’d probably pay everything you have. If suddenly Superman popped up and offered you protection against the alien for the modest fee of half your belongings, you’d probably accept. Your willingness to pay might be drastically reduced, however, if you knew the gun was only a toy, and it might be zero if you knew Superman was a liar and aliens didn’t even exist.

How does this relate to chemicals policy? Well, the European Commission is using anticipated savings in public health costs to justify the costs of implementing its new chemicals policy, Reach (Registration, evaluation and authorisation of chemicals).

The Commission’s proposed Reach system will require companies that manufacture or import more than one tonne of a chemical per year to register this substance in a central database and provide safety information to a central agency and customers. In addition, companies that produce and import chemicals will have to assess the risks arising from their use and take the necessary measures to manage any risk they find. Substances of ’high concern’ will require authorisation for their use by the Commission, with ’no authorisation’ implying a variety of restrictions, including removal from the European market.

The Commission estimates the total costs for Reach to be € 2.3bn for producers and another € 5.2bn for downstream users. These costs, the Commission says, would be easily compensated for by the € 50bn of total health benefits it expects over the next 30 years. The Commission’s first attempt to substantiate this calculation has been shown to be severely flawed. In its extended impact assessment, the Commission has tried again to demonstrate Reach’s enormous potential to make savings in public health costs. This second assessment also warrants a critical look from an epidemiological and economic perspective.

The Commission’s calculation of chemicals-related health damage is expressed in disability-adjusted life years (DALYs). DALYs are an attempt by social scientists and health economists to quantify adverse health effects due to specific risk factors in a given society, and represent the sum of years of life lost and years lived with disability.

The € 50bn benefit is based on the following assumptions: that one per cent of the overall burden of disease in developed market economies, measured in DALYs, is attributable to agro-industrial chemicals and chemical pollution from diffuse sources; 10 per cent of this burden will be identified and removed by Reach (with positive effects on public health starting 10 years after its implementation); 10 DALYs avoided are ’equivalent’ to one life saved; and one life saved is worth € 1 million.

Taken together, these assumptions imply 45 000 DALYs or 4500 lives saved per year (starting 10 years after Reach is implemented) for 20 years, producing total benefits of 4500 x € 1 million, that is € 4.5bn each year from year 10. Discounting by three per cent per year then yields a present value of monetary benefits of roughly € 50bn.

As a ’starting point for the amount of disease attributable to chemicals’ the authors of the EU impact assessment used a ’World Bank estimate’, where 0.6-2.5 per cent of the total burden of disease in established market economies were linked with ’acute and chronic exposure to pesticides and non-point-source industrial contaminants in the environment’ and decided to adopt ’a conservative figure of one per cent’ for the scenario.

The World Bank report does not provide a general estimate on chemicals-related disease, and the disease pattern used in the World Bank scenario is - with minor exceptions - not even typically caused by agrochemicals or by chemicals in general. But even if it were correct, the exposures dealt with would be outside the scope of Reach. In the World Bank study it is further explained that ’poisoning is the most often cited health consequence of pesticide use. such incidences arise from improper application or container disposal’.

The next step in the Commission’s calculation to translate ill health and premature death into monetary terms goes astray. The Commission does not calculate real - and thus avoidable - health related costs, such as for therapy, early retirement or loss of productivity, but estimates an average European citizen’s ’willingness-to-pay’ to reduce the probability of premature death over a given period of time. This willingness-to-pay could vary across cultures, individuals and time. It depends on income, age, health status, various other personal circumstances, and the underlying time period. The willingness to pay to reduce the probability of dying in the next hour is greater than the willingness to pay to reduce the probability in the next 10 years.

Also, the cause of death matters: people might be willing to pay more to reduce the risk of dying from cancer than from a heart attack. There is therefore no such thing as a uniform value of € 1 million for one statistical life.

The Commission’s estimate of the ’willingness-to-pay’ € 1 million for a statistical life is also questionable for other reasons. It draws on surveys carried out in the US and Canada, where the net income is, on average, higher than in Europe.

In 2001, the per capita income in the European Union was 47.3 per cent of that in the US. Assuming a unitary income elasticity of willingness to pay, as is common in the literature, the value of a statistical life in the EU is only about half that in the US.

It is also well known that individuals tend to overestimate the probability of rare events, such as being struck by lightning, and tend to underestimate the probability of common events such as dying from heart disease. This overestimation of small risks has serious implications on the willingness to pay to reduce or eliminate health hazards which are rather small, like dying from chemical poisoning.

There is considerable evidence in the literature that small risks from man-made sources are consistently overrated, often by factors of 10 and more. Using five as a conservative estimate, and taking into account the lower income in Europe, the value of € 1 million for a statistical life is too large by a factor of at least 10.

Another key step in the Commission’s calcualtion of the health benefit is the conversion of 10 DALYs to one statistical life. However, equating the price of 10 DALYs to the price of one statistical life is not warranted because the two components that make up DALYs, years of life lost and years lived with disability, are given identical monetary values. Yet, the values placed on them by individuals are very different.

For almost all non-fatal health outcomes, willingness to pay to avoid such risks is far below that to avoid the risk of death. When people are asked what they were willing to pay to avoid the risk of ill health or injury as compared to death, the price usually drops by a factor of up to 1000. This difference is not reflected in the Commission’s figures. While years lived with disability are weighted down by factors ranging from zero to one, depending on the severity of the condition, this does not capture the reduced willingness to pay to avoid such risks. Therefore more than 10 DALYs are ’equivalent’ to one statistical life.

Nobody doubts that many chemical substances can be hazardous to the environment and to human health. However, chemicals, whether dangerous or not, serve some purpose, many of them related to human health and the environment. If these substances are restricted or replaced by less efficient ones, this purpose suffers. This highlights another flaw in the Commission’s account of the benefits of Reach: it disregards the benefits of having chemicals in the first place.

As an example, chlorine, without any doubt, is toxic but it is also a key ingredient in the worldwide battle against many infectious diseases, such as cholera. According to public health experts, the massive outbreak of cholera which hit Peru in 1991, killing 7000 people and afflicting 800 000 others, was facilitated by Peruvian authorities’ decision to stop chlorinating drinking water because US studies had attributed a small risk of developing cancer to chlorination by-products in drinking water.

Although there is much talk about considering both sides of this coin in the Commission’s extended impact assessment, such unintended side-effects of banning or restricting the use of chemicals are largely ignored both by the Commission and the World Bank strategy paper, upon which the Commission’s estimates are based. This is in violation of a rule proposed in another World Bank paper for public health projects: what happens with and without the project. Here, one half of both the ’with’ and the ’without’ part is missing.

Another potential consequence of Reach is completely disregarded by the Commission: the potential impact on employment. If industry’s warnings are only partially true, rising costs and competitive disadvantages associated with Reach will lead to major job losses in the chemical industry in Europe. Unemployment, on the other hand, is a risk factor associated with higher morbidity as well as mortality for both workers and their families in many epidemiological studies.

A final argument concerns the efficiency of Reach. Even if one took its real and monetary benefits for granted and assumed the alleged reductions in health risks will indeed materialise, the Reach system is among the least efficient ways to achieve this aim.

Today, the major health hazards for European citizens are alcohol, tobacco, fat, and lack of exercise. Also high on the list are air pollution, hypertension, illicit drugs and unsafe sex. It appears that Reach is one more effort at stigmatising man-made chemicals, at the cost of ignoring more substantial risks from other sources.

Given the enormous number of competing risks to life and health other than man-made chemicals, the Commission’s chemicals policy appears to be an outgrowth of what some call ’tunnel vision’ among regulatory agencies who are trying, to quote US Supreme Court Justice Stephen Breyer, ’to go that last mile to the point where it brings about more harm than good’. According to Breyer, few additional gains are made in terms of public health and safety when such a strategy is followed. ’Removing that last little bit [of risk] can involve limited technological choice, high cost, devotion of considerable agency resources, large legal fees, and endless argument.’

This is what Reach might well bring about. If the Commission applied the precautionary principle on Reach, the proposal, in its present form, would have to be withdrawn.

Walter Kr?mer is a specialist in statistics at the Universit?t Dortmund, Germany. Michael Nasterlack and Andreas Zober are in the department of industrial medicine and health protection at BASF, Germany