In many instances, pollution affects human well-being primarily through its impact on human health. For example, diesel exhaust, benzene in fuel oils, arsenic in drinking water, and radiation from power plants are known carcinogens that can increase the risk of premature death from cancer. Conventional air and water pollutants can also cause elevated mortality risks from cardiovascular and intestinal conditions, respectively. This is particularly so for the elderly, young, and individuals with pre-existing health problems. Thus regulatory efforts to decrease pollution can increase well-being by reducing mortality risks for the affected population. Indeed in the United States, the primary justification for far-reaching statutes such as the Safe Drinking Water Act and the Clean Air Act lies in protecting human health. At the same time, reductions in pollution can decrease the incidence of some types of illnesses. For example, exposure to ground-level ozone causes non-fatal (and fatal) respiratory problems for people with asthma, and food and waterborne pathogens can lead to gastrointestinal sickness. Thus regulatory efforts that limit air, land, and water pollution can increase well-being by reducing morbidity. Each of these pathways suggests that non-market benefits from pollution control can arise from the subsequent improvement in human health. In this chapter we describe the approaches that economists have used to measure these benefits.

We begin by noting that tools from several disciplines are in fact needed to measure the value of changes in health outcomes stemming from pollution reductions. It is first necessary to estimate the physical links between a pollutant and health outcomes in a population. Viscusi and Gayer (2005) discuss this process in some detail, listing steps that include (a) establishing a biological link between a compound and an outcome; (b) estimation of an exposure-response function linking different ambient exposure levels to a quantitative measure of the outcome, while accounting for any behavioral adjustments; and (c) assessing the ambient levels experienced by a population at baseline and counterfactual conditions. These steps are not historically done by economists, though in recent years economists have contributed to estimating exposure-response functions. Rather, they provide the input for an economic analysis of how people value the changes in health outcomes brought about by a policy-induced reduction in exposure.