Further explanation of methods used for monetizing impacts from air pollution

This short note tries to explain what approach has been chosen in the quantification of the
unit damage costs for air pollution in the Environmental Prices Handbook 2018 (EU28
version) and the DG Move Handbook on External Costs of Transport. It should be regarded as
an explanatory note to Annex C.3 in the Handbook of External Costs of Transport which is
largely the same as Annex B.3 in the Handbook of Environmental Prices. Both handbooks
have been frequently used in policy evaluations, but some questions have been raised to
what extent they are consistent with the HRAPIE framework from the WHO (2013) on the
recommended values to be taken into account in cost benefit analysis. A recent analysis
suggested that, while the main categories of CRFs from the Handbook of DG Move seem to
be in line with the HRAPIE framework, some questions can be asked especially with respect
to the mortality impacts from O3 and NO2.

This short note explains in more detail how the HRAPIE recommendations have been
implemented in both handbooks for the mortality impacts from O3 and NO2. This note shows
that for NO2, the mortality impact is in line with both the HRAPIE recommendations (WHO,
2013) and the more recent COMEAP study (COMEAP, 2018). For O3 our approach is not in line
with the recommended value from the HRAPIE study but this is done to maintain
consistency with the environmental modelling used in both handbooks. We show that the
combination of the chosen environmental modelling and our adjusted O3 mortality rates
result in similar estimates for mortality from O3 that strictly follow the WHO Guidelines.
Therefore, this deviation has a negligible impact on the total valuation of impacts from
pollutants that cause O3.

To sum up: we acknowledge that there have been small deviations from the HRAPIE
recommendations but that these have been motivated to cope with other uncertainties or
approaches taken in the whole impact-pathway approach. As we will show this has a
negligible impact on the total unit damage costs. Therefore we regard the approach taken
in both handbooks still consistent with HRAPIE recommendation in the context of estimating
unit damage costs.