A review on health cost accounting of air pollution in China

Abstract

Over the last three decades, rapid industrialization in China has generated an unprecedentedly high level of air pollution and associated health problems. Given that China accounts for one-fifth of the world population and suffers from severe air pollution, a comprehensive review of the indicators accounting for the health costs in relation to air pollution will benefit evidence-based and health-related environmental policy-making. This paper reviews the conventional static and the new dynamic approach adopted for air pollution-related health cost accounting in China and analyzes the difference between the two in estimating GDP loss. The advantages of adopting the dynamic approach for health cost accounting in China, with conditions guaranteeing its optimal performance are highlighted. Guidelines on how one can identify an appropriate approach for health cost accounting in China are put forward. Further, we outline and compare the globally-applicable and China-specific indicators adopted by different accounting methodologies, with their pros and cons being discussed. A comprehensive account of the available databases and methodologies for health cost accounting in China are outlined. Future directions to guide health cost accounting in China are provided. Our work provides valuable insights into future health cost accounting research in China. Our study has strengthen the view that the dynamic approach is comparatively more preferred than the static approach for health cost accounting in China, if more data is available to train the dynamic models and improve the robustness of the parameters employed. In addition, future dynamic model should address the socio-economic impacts, including benefits or losses of air pollution polices, to provide a more robust policy picture. Our work has laid the key principles and guidelines for selecting proper econometric approaches and parameters. We have also identified a proper estimation method for the Value of Life in China, and proposed the integration of engineering approaches, such as the use of deep learning and big data analysis for health cost accounting at the fine-grained level (city-district or sub-regional level). Our work has also identified the gap for more accurate health cost accounting at the fine-grained level in China, which will subsequently affect the quality of health-related air pollution policy decision-making at such levels, and the health-related quality of life of the citizens in China.

Keywords: Air pollution; China; Dynamic accounting; Health cost accounting; Static accounting; Sub-regional and city-district-level.