Evaluation of the costs and benefits of household energy and health interventions
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Evaluation of the Costs and Benefits of Household Energy and Health Interventions. 31 st IAEE International Conference, Pre-Conference Workshop on Clean Cooking Fuels Istanbul, 16-17 June 2008 Guy Hutton 1 , Eva Rehfuess 2 and Fabrizio Tediosi 3

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Evaluation of the costs and benefits of household energy and health interventions

Evaluation of the Costs and Benefits of Household Energy and Health Interventions

31st IAEE International Conference,

Pre-Conference Workshop on Clean Cooking Fuels

Istanbul, 16-17 June 2008

Guy Hutton1, Eva Rehfuess2 and Fabrizio Tediosi3

1 World Bank, Phnom Penh, 2 World Health Organization, Geneva, 3 Università Bocconi, Milan


Evaluation of the costs and benefits of household energy and health interventions

Why economic evaluation?

Economic evaluation:

  • demonstrates the economic return of investments in an intervention

  • compares the cost-effectiveness/ costs and benefits of one intervention against another

  • helps policy-makers allocate their limited budget

Caveat:

Economic pay-off is not the only criterion

for identifying sound interventions.


Evaluation of the costs and benefits of household energy and health interventions

Cost-effectiveness analysis

  • How can one maximize health for available resources?

  • perspective: health sector

  • unit: cost-effectiveness ratio, e.g. in $ per healthy life year gained

Courtesy of Dominic Sansoni/World Bank

Cost-benefit analysis

  • Do all the benefits outweigh all the costs of an intervention?

  • perspective: society, multiple sectors

  • unit: benefit-cost ratio in $

Courtesy of Nigel Bruce/Practical Action

Cost-benefit versus cost-effectiveness analysis


Evaluation of the costs and benefits of household energy and health interventions

annual average economic benefit of intervention

Benefit-cost ratio (BCR)

annual average economic cost of intervention

Comparison measure

Economic costs:

=

  • fuel costs, stove costs

  • programme costs (including R&D investment, education)

Economic benefits:

  • reduced healthcare costs

  • health-related productivity gains

  • time savings

  • environmental impacts


Evaluation of the costs and benefits of household energy and health interventions

Interventions and scenarios modelled

  • Basic approach:

    • analysis for 11 developing and middle-income WHO subregions

    • separate analysis for urban and rural areas

    • baseline year 2005; ten-year intervention period (2006-2015)

    • 3% discount rate applied to all costs and benefits

  • Baseline:current mix of dung, wood, coal, cleaner fuels, etc.

  • Intervention 1: (50%, 100% coverage, pro-poor)switch to LPG (ethanol)

  • Intervention 2: (50%, 100% coverage)cleaner-burning, fuel-efficient “rocket-type” stove


Evaluation of the costs and benefits of household energy and health interventions

Important benefit assumptions:health impacts and productivity gains

  • Conclusive evidence for health impact of indoor air pollution:

    • acute lower respiratory infections (ALRI): children under five

    • chronic obstructive pulmonary disease (COPD): adults above 30

    • lung cancer (coal use): adults above 30

  • Avoided health impacts:

    • ALRI, COPD, lung cancer (WHO methodology for burden of disease)

    • LPG/ethanol: risk reduction to baseline risk

    • stoves: 35% risk reduction (personal exposure reduction, lag times)

  • Health-related productivity gains:

    • number of illness-free days and deaths avoided, for type of illness and level of severity

    • valued using human capital approach: daily Gross National Income (GNI) per capita and income-earning life from 15 to 65 years


Evaluation of the costs and benefits of household energy and health interventions

Important benefit assumptions:time savings and environmental benefits

  • Time savings:

    • due to reduced fuel collection (survey data in selected locations)

    • due to time saved on cooking (laboratory data)

    • valued at GNI per capita

  • Local environmental benefits:

    • avoided deforestation

    • valued using tree replacement cost (labour + sapling + wastage)

  • Global environmental benefits:

    • averted CO2 + CH4 emissions (published studies)

    • valued using carbon trading values (Clean Development Mechanism)


Evaluation of the costs and benefits of household energy and health interventions

Proposed voluntary MDG target:halve, by 2015, the population cooking with solid fuels,and make improved cookstoves widely available

World Health Organization, Fuel for life: household energy and health. WHO, 2006.


Evaluation of the costs and benefits of household energy and health interventions

Results (US$ per year):Providing access to LPG, by 2015,to half of those burning solid fuels in 2005

Programme cost: 130 million

Total cost:13 billion

Total benefit: 91 billion

Benefit-cost ratio: 7:1

Benefit-cost ratio*: 4:1

Sensitivity analysis: 2:1 – 29:1

Courtesy of Nigel Bruce/Practical Action

* Intervention cost savings included with economic benefits.


Evaluation of the costs and benefits of household energy and health interventions

Results (US$ per year):Making improved stoves available, by 2015,to half of those burning solid fuels in 2005

Programme cost:650 million

Total cost: -34 billion(2 billion costs,- 36 billion fuel savings)

Total benefit: 105 billion

Benefit-cost ratio: negative

Benefit-cost ratio*: 61:1

Sensitivity analysis: negative

Courtesy of GTZ

* Intervention cost savings included with economic benefits.


Evaluation of the costs and benefits of household energy and health interventions

Distribution of economic benefits

LPG

Improved stoves

Health-related productivity gains and time savings due to less fuel collection and cooking constitute the greatest benefits.


Evaluation of the costs and benefits of household energy and health interventions

Key limitations

  • Considerable variation between world regions, as well as between urban and rural settings.

  • Findings based on global/regional data and assumptions do not necessarily apply to specific countries or programmes.

  • Idealistic, target-based scenarios versus realistic, programme-based analyses.

  • Need to refine optimistic assumptions (e.g. effectiveness of stove, programme costs, unsustainable harvesting of firewood) and pessimistic assumptions (e.g. greenhouse gases included, value of avoided emissions).


Evaluation of the costs and benefits of household energy and health interventions

Conclusions

  • Globally, both a switch to cleaner fuels and the promotion of fuel-efficient, cleaner-burning stoves appear to be highly cost-effective.

  • Making the economic case remains a challenge:

    • Household energy and health is an inter-sectoral issue with no clear policy lead across countries.

    • Programme level versus household level: Where do costs occur? Where do benefits occur?

  • There is a need for the application and refinement of current cost-benefit analysis methodology at national and programme levels.


Evaluation of the costs and benefits of household energy and health interventions

For more information:

http://www.who.int/indoorair

Dr Eva Rehfuess

Public Health and Environment

World Health Organization

1211 Geneva 27

Switzerland

Email: [email protected]

Courtesy of Crispin Hughes/Practical Action


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