Scope of the study

A problem common to health economics and environmental economics is how to evaluate changes in morbidity and mortality; pollution often creates severe health problems which necessitate an explicit treatment of changes in mortality and morbidity risks. However, the approaches used in these two fields to deal with the valuation issue are very different. Most environmental economists have based their approach on mainstream micro and welfare economics, the purpose being to undertake a social cost-benefit analysis of environmental change. Since most environmental goods and services are not valued in the market, a lot of work has therefore been devoted to improving different empirical methods that can be used to measure the willingness to pay (WTP) for changes in environmental quality. In particular, environmental economists have developed and refined the contingent valuation method (CVM), a survey method which is used to measure the WTP for environmental quality; see, for example, Cummings et al. (1986) and Mitchell and Carson (1989). Environmental economists have also used what are known as hedonic price studies in order to isolate the WTP for quality attributes from individuals' actual behaviour in the market; see for example Blomquist et al. (1988), Brookshire et al. (1982) and Viscusi (1992).

In health economics the cost-benefit approach seems to have been largely ignored, although there are exceptions; see, for example, Eastaugh (1992). Most health economists appear to prefer cost-effectiveness analysis, where the health consequences are measured in physical units such as the number of life-years gained from a medical treatment; see, for example, Drummond et al. (1987).