4.2.1 Impact Pathway Analysis

To calculate the damage costs, one needs to carry out an impact pathway analysis (IPA), tracing the passage of a pollutant from where it is emitted to the affected receptors (population, crops, forests, buildings, etc.). The principal steps of an IPA can be grouped as follows, as shown in Figure 4.1:

1. Emission: specification of the relevant technologies and pollutants, e.g., kg of NOx per GWhe emitted by power plant


(site, stack height, and technology)

Dispersion (atmospheric dispersion & chemistry)

-j. Increase in concentration at receptor sites (e.g., ng/m3 of PM^ in all affected regions)

Dose-response function Impact

(e.g., hospital admissions due to PM10)

Monetary valuation -> Cost

(e.g., cost of hospital admission, include WTP to avoid suffering)


(site, stack height, and technology)

Dose-response function Impact

(e.g., hospital admissions due to PM10)

Monetary valuation -> Cost

(e.g., cost of hospital admission, include WTP to avoid suffering)

FIGURE 4.1 Impact pathway analysis.

2. Dispersion: calculation of increased pollutant concentrations in all affected regions, e.g., incremental concentration of ozone, using models of atmospheric dispersion and chemistry for ozone formation due to NOx (this step is also called environmental fate analysis, especially when it involves more complex pathways that pass through the food chain)

3. Impact: calculation of the dose from the increased concentration and calculation of impacts (damage in physical units) from this dose, using a dose-response function (DRF), e.g., cases of asthma due to this increase in ozone

4. Cost: economic valuation of these impacts, e.g., multiplication by the cost of a case of asthma

The impacts and costs are summed over all receptors of concern. The work involves a multidisciplinary system analysis, with inputs from engineers, dispersion modelers, epidemiologists, ecologists, and economists. The result of an IPA is the damage cost per kg of emitted pollutant, as shown in Figure 4.5 of Section 4.3. The steps of the IPA are described in the following sections.

The reader may wonder about the relationship between an IPA and an environmental impact study (EIS) that is required before the approval of a proposed installation (factory, power plant, incinerator, etc.). The purpose of an EIS is to ensure that nobody is exposed to an unacceptable risk or burden. Because the highest exposures are imposed in the local zone, it is sufficient for an EIS to focus on local analysis, up to 10 km depending on the case. Thus, an EIS provides the possibility of a veto if a proposed installation is considered unacceptable. By contrast, the calculation of total damage costs requires an IPA where the damages are summed over all affected receptors. Regarding most air pollutants emitted in Europe the affected receptors are the entire continent, and in the case of greenhouse gases (GHGs) it is the entire globe. Damage costs are needed primarily by decision makers at the national or international level, or generally by anyone concerned with total impacts.

For many environmental choices, one needs to look not only at a particular source of pollutants but also must take into account an entire process chain by means of a life cycle assessment (LCA). For example, a comparison of power generation technologies involves an analysis of the fuel chain sketched in Figure 4.2. Whether an IPA of a single source or an LCA of an entire cycle is required depends on the policy decision in question. When finding the optimal limit for the emission of NOx from an incinerator, an IPA is sufficient, but the choice between incineration and landfill of waste involves an LCA.

In principle, a site-specific IPA would evaluate the damages and costs for each pollution source in the life cycle. In practice, however, most LCAs have taken the shortcut of first summing the emissions over all stages and then multiplying the result by site-independent impact indices. Additionally, most practitioners of LCA reject the concept of monetary valuation, preferring instead to use approximately ten nonmonetary indicators of "potential impact" that are based on expert judgment.

4.2.2 Dispersion of Pollutants

The principal GHGs, CO2, CH4, and N2O, stay in the atmosphere long enough to mix uniformly over the entire globe. No specific dispersion calculation is needed. However, the calculation of impacts is extraordinarily complex and the reader is referred merely to the main authority, the Intergovernmental Panel on Climate Change (IPCC, For most other air pollutants, in particular PM10 (particulate matter with diameter less than 10 nm), NOx and SO2, atmospheric dispersion is significant over hundreds to thousands of km, so both local and regional effects are important. ExternE uses a combination of local and regional dispersion models to account for all significant damages. The main model for the local range (< 50 km from the source) has been the Gaussian plume model ISC (Brode and Wang 1992).

At the regional scale one needs to take into account the chemical reactions that lead to the transformation of primary pollutants (i.e., the pollutants as they are emitted) to secondary pollutants. For example when studying the creation of sulfates from SO2, ExternE uses the Windrose trajectory model (WTM) (Trukenmuller and Friedrich 1995) to estimate the concentration and deposition of acid species. WTM is a user-configurable Lagrangian trajectory model, derived from the Harwell trajectory model (Derwent and Nodop 1986). The modeling of ozone is based on the EMEP MSC-W oxidant model

^ Real impacts for each stage (site specific) Goal: evaluate the entire matrix

Steps of impact pathway analysis Stage of fuel chain j.



Exposure-[ response function

Economic valuation

Fuel extraction

Fuel transport

Power plant

Transmission of electricity

Management of wastes

Life cycle assessment:

First sum over


i Then

^ ^ x Multiplication by

"potential impact" indices

FIGURE 4.2 Relation between impact pathway analysis and current practice of most LCA, illustrated for the example of electricity production. (From Spadaro, J. V. and Rabl, A. 1999. International Journal of Life Cycle Assessment, 4(4), 229-243. With permission.)

FIGURE 4.2 Relation between impact pathway analysis and current practice of most LCA, illustrated for the example of electricity production. (From Spadaro, J. V. and Rabl, A. 1999. International Journal of Life Cycle Assessment, 4(4), 229-243. With permission.)

(Simpson 1992; Simpson and Eliassen 1997). EMEP is the official model used for policy decisions about transboundary air pollution in Europe.

The calculation of damage costs is carried out by using the EcoSense software package (Krewitt et al. 1995), an integrated impact assessment model that combines these atmospheric models with databases for receptors (population, land use, agricultural production, buildings and materials, etc.), DRFs and monetary values. J. V. Spadaro also has developed a simplified analysis tool called RiskPoll (actually a package of several models with different input requirements) that is freely available from or This tool is based on the interpolation of dispersion calculations by EcoSense. Its simplest version yields results that are typically within a factor of two to three of detailed EcoSense calculations for stack heights above 50 m. RiskPoll includes a module for the multimedia pathways of Figure 4.3.

Several tests have been done to confirm the accuracy of the results. The tests have checked the consistency between ISC and ROADPOL, and the concentrations predicted by WTM were compared with measured data and with calculations of the EMEP program, the official program for the modeling of acid rain in Europe.

Whereas only the inhalation dose matters for PM10, NOx, S02 and 03, toxic metals and persistent organic pollutants affect humans also through food and drink. These pollutants require a much more complex IPA to calculate ingestion doses. Spadaro and Rabl (2004) have developed a model for the assessment of external costs due to the emission of the most toxic metals (As, Cd, Cr, Hg, Ni, and Pb), as well as certain organic pollutants, in particular dioxins. The model takes into account the pathways in Figure 4.3. The output of this model is the damage per kg of pollutant, as a function of the site and conditions (for emissions to air: stack height, exhaust temperature, and velocity) of the source. The model is based mostly on transfer factors published by EPA (1998), with some supplemental data of IAEA (1994, 2001). These transfer factors account in a simple manner for the transport of a pollutant between different environmental compartments, like the uptake by agricultural crops of a pollutant from the soil. The uncertainties are large, but at least approximate values for the pollutants of concern are available.


Salt water

Ingestion dose

Inhalation dose

FIGURE 4.3 Pathways taken into account for health impacts of air pollutants. Direct emissions to soil or water are a special case where the analysis begins at the respective "soil" and "water" boxes. In the present version of the model seafood is not yet included.

It is not yet possible to have all of the elements for calculating the dose due to ingestion of seafood. The dose may be potentially large because of bioconcentration and the fact that most fish are oceanic rather than freshwater. Even if the concentration increment in the sea is very small, the collective dose from seafood could be significant if the removal processes (sedimentation) are slow, and the analysis has no cutoff in time.

A general result of this analysis is that when these pollutants are emitted into the air, the ingestion dose can be approximately two orders of magnitude larger than the dose by inhalation. Because nowadays most food is transported over very large distances, the total dose varies little with the site where these pollutants are emitted into the air. As far as damages are concerned, one has to note that the same dose can have a very different effect on the body depending on whether it is inhaled or ingested. Cd, CrVI, and Ni, for instance, are carcinogenic only through inhalation according to current knowledge.

4.2.3 Dose-Response Functions: General Considerations

The DRF relates the quantity of a pollutant that affects a receptor (e.g. population) to the physical impact on this receptor (e.g., incremental number of hospitalizations). In the narrowest sense of the term, it should be based on the dose actually absorbed by a receptor. However, the term DRF is often used in a wider sense where it is formulated directly in terms of the concentration of a pollutant in the ambient air, accounting implicitly for the absorption of the pollutant from the air into the body. The functions for the classical air pollutants (NOx, S02, O3, and particulates) are typically of this kind, and the terms exposure-response function or concentration-response function (CRF) are often used.

The DRF is a central ingredient in the IPA, thus meriting special attention. Damage can be quantified only if the corresponding DRF is known. Such functions are available for the impacts on human health, building materials, and crops caused by a range of pollutants such as primary and secondary (i.e., nitrates, sulfates) particles, ozone, CO, S02, NOx, benzene, dioxins, As, Cd, Cr, Ni, and Pb. The most comprehensive reference for health impacts is the IRIS database of EPA ( iris/index.html). For the application in an IPA, the information often has to be expressed in somewhat different form, due to accounting for additional factors such as the incidence rate (ExternE 1998; Spadaro and Rabl 2004). Unfortunately, the DRFs are very uncertain or not known for many pollutants and many impacts. For most substances and noncancer impacts, the only available information covers thresholds, typically the NOAEL (no observed adverse effect level) or LOAEL (lowest observed adverse effect level). Knowing thresholds is not sufficient for quantifying impacts; it only provides an answer to the question whether or not there is a risk. The principal exceptions are carcinogens and the classical air pollutants, for which explicit DRFs are known (often on the assumption of linearity and no threshold).

By definition, a DRF starts at the origin, and in most cases it increases monotonically with dose, as sketched schematically in Figure 4.4. At very high doses, the function may level off in S-shaped fashion due to saturation, but that case is not of interest here. DRFs for health are determined from epidemiological studies or laboratory studies. Because the latter are mostly limited to animals, the extrapolation to humans introduces large uncertainties.

A major difficulty lies in the fact that unless the sample is very large, relatively high doses are needed to obtain observable nonzero responses; such doses are usually far in excess of typical ambient concentrations in the EU or North America. Thus there is a serious problem of how to extrapolate from the observed data towards low doses. Figure 4.4 indicates several possibilities for the case where the point P corresponds to the lowest dose at which a response has been measured. The simplest is the linear model, i.e., a straight line from the origin through the observed data point(s). The available evidence suggests that a DRF is unlikely to go above this straight line in the low dose limit. However, the straight-line model does appear to be appropriate in many cases, especially for many cancers. In fact, most estimates of cancers due to chemicals or radiation assume this linear behavior.


With fertilizer effect


FIGURE 4.4 Possible behavior of dose-response functions at low doses. If P is the lowest dose where a nonzero impact has been observed, the extrapolation to lower doses is uncertain but values higher than linear are unlikely.

With fertilizer effect


FIGURE 4.4 Possible behavior of dose-response functions at low doses. If P is the lowest dose where a nonzero impact has been observed, the extrapolation to lower doses is uncertain but values higher than linear are unlikely.

Another possibility is the "hockey stick": a straight line down to some threshold, and zero effect below that threshold. Thresholds occur when an organism has a natural repair mechanism that can prevent or counteract damage up to a certain limit.

There is even the possibility of a "fertilizer effect" at low doses, as indicated by the dashed line in Figure 4.4. This effect can be observed in the DRFs for the impact of NOX and SO2 on crops: a low dose of these pollutants can increase the crop yield. In other words, the damage is negative. Generally a fertilizer effect can occur with pollutants that provide trace elements needed by an organism.

In practice, most DRFs used by ExternE, particularly all the ones for health, are assumed to be linear (without threshold). However, for the calculation of incremental damage costs, there is no difference between the linear and a hockey stick function with the same slope, if the background concentration is everywhere above this threshold; only the slope matters. For the particles, NOX, S02, O3, and CO the background in most industrialized countries is above the level where effects are known to occur. Thus the precise form of the DRF at extremely low doses is irrelevant for these pollutants; if there is a no-effect threshold, it is below the background concentrations of interest.

4.2.4 Health Impacts

In terms of costs, health impacts contribute the largest part of the damage estimates of ExternE. A consensus has been emerging among public health experts that air pollution, even at current ambient levels, aggravates morbidity (especially respiratory and cardiovascular diseases) and leads to premature mortality (e.g., Wilson and Spengler 1996; ERPURS 1997; the reports of the World Health Organization, available at, see Table 4.1). There is less certainty about specific causes, but most recent studies have identified fine particles as a prime culprit; ozone has also been directly implicated. The most important cost comes from chronic mortality due to particles, calculated on the basis of Pope et al. (2002). This term, chosen by analogy with acute and chronic morbidity impacts, indicates that the total or long-term effects of pollution on mortality have been included, by contrast to acute mortality impacts that are observed within a few days of exposure to pollution. Another important contribution

TABLE 4.1 Air Pollutants and Their Effects on Health

Primary Pollutants

Secondary Pollutants


Particles (PM10, PM2 5,


black smoke)

Cardiopulmonary morbidity (cerebrovascular hospital admissions, congestive heart failure, chronic bronchitis, chronic cough in children, lower respiratory symptoms, cough in asthmatics)

Cardiopulmonary morbidity (hospitalization, consultation of doctor, asthma, sick leave, restricted activity)



Like particles?





Like particles?


Morbidity (respiratory hospital admissions, restricted activity days, asthma attacks, symptom days)


Mortality (congestive heart failure) Morbidity (cardiovascular)

PAH (diesel soot,


benzene, 1,3-

butadiene, dioxins)

As, Cd, CrVI, Ni

Other morbidity

Hg, Pb

Morbidity (neurotoxic)

comes from chronic bronchitis due to particles (Abbey et al. 1995). In addition, there maybe significant direct health impacts of SO2, but for direct impacts of NOx, the evidence is less convincing.

In ExternE, the working hypothesis has been to use the DRFs for particles and for 03 as basis. Effects of NOX and SO2 are assumed to arise indirectly from the particulate nature of nitrate and sulfate aerosols, and the effects calculated by applying the particle DRFs to these aerosol concentrations. But the uncertainties are large because there is insufficient evidence for the health impacts of the individual components or characteristics (acidity, solubility, etc.) of particulate air pollution. In particular there is a lack of epidemiological studies of nitrate aerosols because until recently air pollution monitoring stations did not monitor this pollutant. In view of the lack of evidence for thresholds at current ambient concentrations, all DRFs for health impacts have been assumed linear at the population level. By contrast to the homogeneous populations of cloned animals studied by toxicologists, the absence of a no-effect threshold is plausible for real populations because they always contain individuals with widely differing sensitivities (for example, at any moment about 1% is within the last nine months of life and thus extremely frail).

4.2.5 Monetary Valuation

The goal of the monetary valuation of damages is to account for all costs, market and nonmarket. The valuation of an asthma attack should include not only the cost of the medical treatment but also the willingness to pay (WTP) to avoid the residual suffering. If the WTP for a nonmarket good has been determined correctly, it is like a price, consistent with prices paid for market goods. Economists have developed several tools for determining nonmarket costs; of these tools contingent valuation (CV) has enjoyed increasing popularity in recent years (Mitchell and Carson 1989). The basic idea of a CV is to ask people how much they would be willing to pay for a certain good if they could buy it. The results of well-conducted CV studies are considered sufficiently reliable.

It turns out that nonmarket goods dominate damage costs of air pollution, especially the valuation of mortality. The single most important parameter is the so-called "value of statistical life" (VSL). This term often evokes hostile reactions from people who think that economists try to measure the value of life. The value of life is limitless. To save an individual in danger no means are spared. In reality VSL is the "willingness to pay for avoiding a small risk of an anonymous premature death". In ExternE (2000), a European-wide value of 3.4 M€ was chosen for VSL, consistent with similar studies in the USA; this value was chosen as average of the VSL studies that had been carried out in Europe.

A crucial question for air pollution mortality is whether one should simply multiply the number of premature deaths by VSL, or whether one should take into account the years of life lost (YOLL) per death. The difference is very important because premature deaths from air pollution tend to involve far fewer YOLL per death than accidents (on which VSL is based). In fact, for air pollution the appropriate measure is the value of a YOLL due to air pollution, called VOLY (value of a life year), whereas the true number of premature deaths due to pollution cannot even be determined, as shown by Rabl (2003).

There is considerable uncertainty because until recently there have been no studies to determine VOLY. ExternE (1998, 2000) calculated VOLY on theoretical grounds by considering VSL as the net present value of a series of discounted annual values. The ratio of VSL and the value of a YOLL thus obtained depends on the discount rate; it is typically in the range of 20-30. More recently ExternE carried out a CV study for VOLY and is now using a value of 50,000 € for a year of life lost due to air pollution. As for cancers, ExternE assumes 0.45 M€ for nonfatal cancers, and 1.5-2.5 M€ for fatal cancers (depending on the YOLL for each cancer type).

4.2.6 Global Warming

The valuation of global warming damages is extremely complex (see, for example, Tol et al. (2001)). Not only is the task difficult because of the large number of different impacts in all countries of the world that should be taken into account, but also as these impacts will occur in future decades and centuries one needs to estimate how these costs will evolve into the distant future. On top of the resulting uncertainties there are controversial ethical issues related to the valuation of mortality in developing countries (where most of the impacts will occur) and the choice of the discount rate for intergenerational costs.

Several major studies have been published with estimates of the cost per tonne of CO2eq (the subscript eq indicates that the result can also be used for other GHGs if their masses are multiplied by their global warming potential (GWP)). Most of the results are in the range of 1-50 €/tCO2eq, the range being so wide because of the large uncertainties. The ExternE team carried out two valuation efforts: the first, in 1998, yielded a range of values with a geometric mean of 29 €/tCO2eq, the second, in 2000, obtained a much lower value of 2.4 €/tCO2eq because of more optimistic assumptions and a better accounting for benefits such as increased agricultural production in cold countries. The current phase of ExternE uses the value of 19 €/tCO2eq because that is the abatement cost in the EU implied by the commitment to the Kyoto Protocol. It represents an implicit valuation by decision makers of the EU. It is also in effect the cost imposed on the EU by incremental emissions of CO2 in the EU. The choice of this value appears reasonable in view of the estimates published in the literature.

4.2.7 Other Impacts

Air pollution damage to materials and agricultural crops has been found to make a relatively small contribution to the damage costs, only a few percent of the total. Estimations of ecosystem impacts, other than agricultural losses, have remained extremely uncertain, if they have been attempted at all. Some estimates have been made of the costs of forest decline due to acid rain, but more recently doubts have been raised about their validity. In general there is a lack of information on ecosystem impacts and their economic valuation.

However, air pollution at typical ambient concentrations in the EU does not seem to have significant direct (i.e., not acid rain) impacts on ecosystems. At first glance this claim may appear surprising because human health impacts are significant and one might indeed expect similar impacts on animals as on humans. The explanation lies in what is valued: society values ecosystem impacts at the level of a population, human impacts at the level of the individual. Concentrations of air pollutants are generally so small that the incremental mortality is at most a small percentage of the natural rate. Furthermore, most of the deaths from air pollution occur among individuals well beyond reproductive age. If a small percentage of animals die prematurely after having produced and raised offspring, the effect on the ecosystem is negligible. But if any human dies prematurely, society cares a great deal.

The situation is different for certain aquatic impacts. Acidification of rivers and lakes has been shown to be detrimental to aquatic life. A river can collect much of the air pollution from a large region, leading to relatively high concentrations in the water, quite apart from direct emission of pollutants to water.

4.2.8 UWM: A Simple Model for Damage Cost Estimation

A simple and convenient tool for the development of typical values is the "uniform world model" (UWM), first presented by Curtiss and Rabl (1996) and further developed, with detailed validation studies by Spadaro (1999), and Spadaro and Rabl (2002). More recently Spadaro and Rabl (2004) extended it to toxic metals and their pathways through the food chain. The UWM is a product of a few factors; it is simple and transparent, showing at a glance the role of the most important parameters of the IPA. It is exact for tall stacks in the limit where the distribution of either the sources or the receptors is uniform and the key atmospheric parameters do not vary with location. In practice the agreement with detailed models is usually within a factor of two for stack heights above 50 m. For policy applications one needs typical values, and the UWM is more relevant than a detailed analysis for a specific site.

The UWM for the damage cost Duni in €/kg of a particular impact due to the inhalation of a primary pollutant is shown in Equation 4.1:

v dep wherep is the cost per case ("price") [€/case], sCR is the CRF slope [(cases/yr)/(pers-(|ig/m3))], p is the average population density [pers/km2] within 1000 km of source, and vdep is the deposition velocity of pollutant (dry+wet) [m/s].

For secondary pollutants the equation has the same form, but with an effective deposition velocity that includes the transformation rate of the primary into the secondary pollutant. With this model it is easy to transfer to the results from one region to another (assuming that CRF and deposition velocity are the same): simply rescale the result in proportion to the receptor density and the cost per case.

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