Some costs of inaction

Prof. Mikael Skou Andersen, Aarhus University (DK)

Outline of presentation

• Implications of precautionary principle for socio-economic analysis

• Lead case: costs of inaction• Drinking water nitrate: a case for risk

analysis• Outlook: green growth and

technological innovation

Principles of EU environmental policy

• Precaution

• Prevention

• Polluter-pays

• TFEU art. 191.2

”Union policy on the environment shall aim at a high level of protection taking into account the diversity of situations in the various regions of the Union

It shall be based on the precautionary principle and on the principles that preventive action should be taken, that environmental damage as a priority be rectified at source and that the polluter should pay”

Precautionary principle in EU law

• Commission communication COM (2000)1 on the precautionary principle:• ”The precautionary principle applies where scientific evidence is

insufficient, inconclusive or uncertain and preliminary scientific evaluation indicates that there are reasonable grounds for concern that the potentially dangerous effects on the environment, human animal or plant health may be inconsistent with the high level of protection chosen by the EU”

• European Court: Paraquat case (Sweden vs. Commission T-229/04)• ‘the existence of solid evidence, which while not resolving

scientific uncertainty, may reasonably raise doubts as to the safety of a substance’, when interpreted ‘in combination with the precautionary principle’

Weak precautionary principle

• Rio declaration, principle 15 (1992)• ”In order to protect the environment, the

precautionary approach shall be widely applied by States according to their capabilities. Where there are threats of serious or irreversible damage, lack of full scientific certainty shall not be used as a reason for postponing cost-effective measures to prevent environmental degradation”

• Adopted by 172 countries incl. USA• ‘cost-effective’ vs. ’lack of scientific certainty’ ?

Socio-economic analysis

• European Union requirements• Structural funds• WFD art. 4: proportionality clause

• Revival: regulatory impact analysis• Addressing safety, health and environment• deregulation agenda: CBA

• Origin: US flood control act (1936)• Addressing floods and economic crisis• Roosevelt’s New Deal: ‘orderly process’

Will CBA get the answers right ?

• Costs of measures are usually fairly straight-forward to quantify and monetize

• Benefits of measures will depend on assessment of the risk in question – do we need ‘proof’ ?• Need to quantify relations between cause and effect• Need to value and monetize key impacts

• Critique (Ackerman and Heinzerling, 2005)• “If today’s methods of CBA had been applied in the past, would it have

given its blessings to the early regulations which now look so successful in retrospect?” No: “The technique would have gotten the answer wrong”

Knowledge

Lack of knowledge

Boundary between our knowledge and lack of

knowledge

Research and development

From: Poul Harremöes

• research effort is biased towards ‘established’ issues and problems

Case of Lead (Pb)

• Highly Toxic – Acute effects -> Saturnism

• Accumulates in– bones– brain– Liver

• Many chronic health impacts– Neurodevelopment (children)– Anemia (Adults)

• Biomarkers– Pb in blood (short term exp.)– Pb in urine (short term exp.)– Pb in bones (long term exp.)

• Lead (Pb) accumulation in body

• Age Dependent Biokinetic Model – ADBM accounts for body burden

– Specifies the contribution to Pb blood from inhalation

CHILDRENS IQ-LOSS

Pb blood / Pb air

• dependent of age• dependent of exposure time

0

0,5

1

1,5

2

2,5

3

0 200 400 600 800 1000 1200 1400 1600 1800 2000

Day of exposure (day 0 = birth)

ug

/dl

L A U

Pb air - 1

Pb air - 3

Pb air - 2

IMPACT PATHWAY APPROACH Externe (2005) Methodology

Local scale (MWCP as

emission source)

Long term conditions

Danish conditions

Quantification of Emission

Modeling of Increment in Air Concentration

Concentration-Response Function

Monetary Evaluation of Impacts

STEPS

Atmospheric model

Bio-kinetic model

Loss of IQ points

IQ loss / Pb blood function

Exposed population

FOCUS ON MODELS

REDUCED LIFETIME EARNINGS

• Cognitive impairments reduce income by 2-3% per IQ-point lost

External costs of lead: €1.5/gramPb (r=1.4%)

Up to 1985:• 1 gram of Pb per liter petrol• imply annual social costs of 4-6 % of GDP

(Schwartz 1993; Grosse et al. 2002; Pizzol et. al., 2010)

Implications of lead case

• No-threshold for impact on childrens IQ has been thoroughly documented

• Evidence triggered ban after 50 years of controversy

• Careful inspection of the early OSH evidence presented in 1925 suggests need for ban

• A CBA-framework extended with risk analysis

Drinking water nitrate case

• WHO guide value of 50 mgNO3 /liter reflects acute toxicity; no safety factor

• IARC level 2A: probably carcinogenic to humans via nitrosation – chronic impacts

• Epidemiological studies suggest carcinogenic impacts >25 mgNO3 /liter

• Which number for the benefits of avoided impacts to be used in SEA/CBA ?

European Environment Agency

European Environment Agency

0.01

0.00

0.00

0.03

0.02

0.03

0.23

0.080.07

0.05

0.480.30

0.020.03

0.39

0.07

1.340.34

0.15

0.05

0.07

0.00

0.03

0.00

0.15

0.02

1.29 with illustrative health-related external costs

€/kgNapplied

(NUTS1 averages; EXIOPOL)

Biogas: vehicle for nitrogen and climate innovation

Århus 23 November 2009

Pb in products

• Flow of Metals in waste

What role for precautionary principle ?

• Socio-economic assessment (incl. CBA) is often a mandatory requirement in providing support to decision-makers

• Careful screening of potential impacts (risk analysis) needs to be an integral part in considering cost-effective measures

• The precautionary principle places the burden of proof on the proponents of the activities in question, not on socio-economic analysis or the victims of pollution. A high level of protection is emphasised in TFEU.

European Environment Agency

Reference

Andersen MS and Clubb DO, 2013. Understanding and accounting for costs of inaction, Chapter 23 in Late lessons from early warnings: science, precaution, innovation, EEA Report No. 1/2013, Copenhagen: European Environment Agency. http://www.eea.europa.eu/publications/late-lessons-2#!