Estimating environmental health costs: Valuation of children’s health impacts

Significant environmental health risks to children include those from poor air and water quality as well as specific contaminants such as lead. In order to include quantified impacts in cost benefit analysis relating to environmental health projects or policies they should have monetary values attached to them, derived from willingness to pay measures. The article reports on the state-of-the-art relating to the derivation of such values. The questions are: How should we derive preferences for a population that may not be experienced in expressing, or have the capacity to express, preferences of their own? Is it reasonable to assume that household composition and structure does not determine WTP values expressed for children within a household? Are parents’ marginal rates of substitution between values for their own health greater than, less, or the same as, those for their children or other people and their children? Does the environmental context matter in determining values? Are the age of the child and the futurity of the health risk important in determining values? Our review suggests that the sophistication of the theoretical models has not yet been translated into similarly differentiated empirical findings. The majority of empirical evidence to date does, however, suggest significant altruism between parents and children; the ratio of WTP between children’s and own (parents’) is generally found to be greater than unity. Future research needs are highlighted in empirical revealed and stated preference studies in a wider range of environmental contexts, in exploration of the effects of household composition and structure, in futurity and valuation of latency, and complementarity with nonmonetary metrics.