Environmental Health:Economic Costs of Environmental Damage And Suggested Priority Interventions


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Environmental Health:
Economic Costs of Environmental Damage
And Suggested Priority Interventions

A Contribution to the Philippines
Country Environmental Analysis

Submitted to
The World Bank

Final Report
March 31, 2009

The results indicate that the economic costs of pollution and sanitation-related
health effects are high and cannot be ignored. The combined costs for all three sectors in 2003 totaled PhP 42.4 billion (USD 783.2 million) in lost productivity due to premature deaths or PhP 168.4 billion (USD 3.1 billion) in terms of value of statistical life (Table1). In addition, the cost of morbidity was PhP 18.3 billion (USD 337.6 million), comprising of loss in productivity totaling PhP 10.4 billion (USD 191.3 million), direct costs to Filipino households to treat these illnesses totaling PhP 6.4 billion (USD 118.7 million), and the cost to the government health care insurance system—representing the subsidy for PhilHealth members’ hospitalization costs—and for general government subsidy for publicly-owned health facilities was close to PhP 1.5 billion (USD 27.6 million).

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Environmental Health:Economic Costs of Environmental Damage And Suggested Priority Interventions

  1. 1. Environmental Health: Economic Costs of Environmental Damage And Suggested Priority Interventions A Contribution to the Philippines Country Environmental Analysis Submitted to The World Bank Final Report March 31, 2009 1 Agustin L. Arcenas1 World Bank Consultant. The findings, interpretations, and conclusions expressed herein are those ofthe author’s, and do not necessarily reflect the views of the World Bank and its affiliated organizations,or those of the Executive Directors of the World Bank or the governments they represent. Please emailcomments about the report to the author at alarcenas@econ.upd.edu.ph.The author would like to acknowledge and thank the following individuals and groups of individuals for allthe help, assistance and comments and suggestions they generously shared in the conduct of the researchand writing of this report: Dr. Jan Bojo and Ms. Maya Villaluz; the author’s research assistants, RalphBulatao and Iva Sebastian; Dr. Bjorn Larsen and Dr. Maureen Cropper; Prof. Elma Torres; Mr. KarlGaling; Dr. Dennis Batangan; The Manila Observatory; Dr. Bernardino Aldaba, Dr. Carlo Panelo, Mr.Carlos Tan, Mr. Paul Mariano and the HPDP group based at U.P. School of Economics; the staff atPhilHealth and the Department of Health; Dr. Stella Quimbo; and finally, Dr. Aleli Kraft. 1
  2. 2. LIST OF ABBREVIATIONS4-STC Four Stroke TricyclesADB Asian Development BankAF Attributable FractionsALRI Acute Lower Respiratory InfectionBCA Benefit-Cost AnalysisCH4 MethaneCOPD Chronic Obstructive Pulmonary DiseasesCO Carbon MonoxideCO2 Carbon DioxideCOC Certificate of ComplianceCOI Cost of IllnessDALY Disability-Adjusted Life-YearDENR Department of Environment and Natural ResourcesDHS Demographic and Health SurveyECC Environmental Compliance CertificateEMB Environmental Management BoardEO Executive OrderESI Economic Impacts of Sanitation in the PhilippinesFHSIS Field Health Surveillance Information SystemGNI Gross National IncomeGS Good ShepherdHCA Human Capital ApproachHCV Human Capital ValueHECS Household Energy Consumption SurveyIAP Indoor Air PollutionI/M Inspection and MaintenanceLC Local CurrencyLPG Liquefied Petroleum GasLRT Light Rail TransitLTO Land Transportation AgencyMMAQISDP Metro Manila Air Quality Improvement Sector Development ProgramMMDA Metro Manila Development AuthorityMO Manila ObservatoryMRT Metro Rail TransitMT/T motorcycles and tricyclesMVIS Motor Vehicle Inspection SystemNDHS National Demographic and Health SurveyNGO Non-governmental OrganizationNO Nitrogen OxideNO2 Nitrogen DioxideNOx Nitrogen OxidesNPO National Press OfficeOAP Outdoor Air Pollution 2
  3. 3. PEM Philippine Environmental MonitorPETC Private Emission Testing CenterPGH Philippine General HospitalPhP Philippine PesoPHS Philippine Health StatisticsPM Particulate MatterPNRI Philippine Nuclear Research InstituteRR Relative RiskSOx Sulfur OxideSPM Suspended Particulate MatterTOGs Total Organic GasesUSAID United States Agency for International DevelopmentUSD United States DollarUV UltravioletVOC Volatile Organic CompoundVSL Value of Statistical LifeWHO World Health OrganizationWPR Western Pacific RegionWSH Water Pollution, Sanitation and HygieneWSP Water Pollution, Sanitation and Hygiene Project 3
  4. 4. List of FiguresFigure 1 - Comparative Summary of the Economic Costs of WSH, IAP and OAP- Related Illnesses, 2003Figure 2 - Annual Average PM10 Levels in cities in Metro Manila and in Antipolo CityFigure 3 - Annual Average PM2.5 Levels in Metro ManilaFigure 4 - OAP Cost to Households of Treatment (Net of Public Health Care Subsidy), 2003Figure 5 - Government Health Care Subsidy per OAP-Illness, 2003Figure 6 - Lost Income Due to OAP-related Illnesses, 2003Figure 7 - Total Economic Cost of OAP-related Morbidity, 2003Figure 8 - Mortality Cases Due to OAP, Grouped According to Working and Non- working Age Groups, 2003Figure 9 - Cost of Premature Deaths due to OAP, 2003Figure 10 - New Vehicle Registration (All Types) Trend, 2007Figure 11 - Percentage of Households Use of the Type of Cooking Fuel, 2004Figure 12 - Household Fuel Use by Urbanity, 1995Figure 13 - Household Use of Solid Fuel by Income Class, 2004Figure 14- Primary Cooking Fuel for Households, 2004Figure 15 - Households Exposed to Indoor Air Pollution (in percentage)Figure 16 - Morbidity Cases Attributable to IAP, By Gender, 2003Figure 17 - IAP Cost to Households of Treatment (Net of Public Health Care Subsidy), 2003Figure 18 - Government Health Care Subsidy per IAP-Illness, 2003Figure 19 - Lost Income Due to IAP-related Illnesses, 2003Figure 20 - Total Economic Cost of IAP-related Morbidity, 2003Figure 21 - Cost of Premature Deaths due to IAP, 2003 (HCV)Figure 22 - Mortality Cases Due to IAP Grouped According to Working and Non- working Age Groups, 2003Figure 23 - Household Access to Improved Water Supply and Sanitation, 2003 (National)Figure 24 - Household Access to Improved Water Supply and Sanitation, 2003 (Metro Manila)Figure 25 - WSH Cost to Households of Treatment (Net of Public Health Care Subsidy), 2003Figure 26 - WSH Cost to Households of Treatment (Net of Public Health Care Subsidy), 2003 per IllnessFigure 27 - Government Health Care Subsidy per WSH-Illness, 2003Figure 28 - Lost Income due to WSH-related Illnesses, 2003Figure 29 - Total Economic Cost of Morbidity from WSH, 2003Figure 30 - Mortality Cases Due to WSH Grouped According to Working and Non- working Age Groups, 2003Figure 31 - Cost of Premature Deaths due to WSH, 2003 (HCV)Figure 32 - Median Construction Cost of Water Supply Facilities for Select Regions (in USD)Figure 33 - Percent Reduction in Diarrhea Morbidity of Different Water and Sanitation Interventions 4
  5. 5. Figure 34 - Cost-effectiveness of Water Supply, Sanitation, and Hygiene Promotion (USD/DALY)Figure 35 - Median Construction Cost of Sanitation Technologies in Select Regions (in USD)List of TablesTable 1 - Summary Table of Economic Costs Breakdown per Sector (USD’000)Table 2 - Summary of Mortality Cases Per Sector and Age Group, 2003Table 3 - Summary of Morbidity Cases Per Sector and Age Group, 2003Table 4 - Attributable Fractions (AF) for OAP-related Morbidity, 2003Table 5 - Cases of OAP-related Illnesses by Age Group, 2003Table 6 - Relative Risk Ratios and Corresponding Attributable Fractions for Specific IllnessesTable 7 - Mortality Cases due to OAP, by Specific Age Group, 2003Table 8 - BCA-ratios for Cases of Retro-fitting of In-use Diesel Vehicles in the PhilippinesTable 9 - Light Rail Transits Lines in the PhilippinesTable 10 - Proposed Railway Projects with project costs (in USD millions)Table 11 - Financial Summary of MRT Line 3 Operations (in million pesos)Table 12 - Cost Estimates for the Metro Manila Air Quality Improvement Sector Development Program (MMAQISDP) (in USD millions)Table 13 - Particulate Emissions from Household Cooking, 2004Table 14 - Attributable Fractions Used for Morbidity Cases per IllnessTable 15 - Cases of IAP-related Illnesses by Age Group, 2003Table 16 - Attributable Fractions Used for Mortality Cases per IllnessTable 17 - Mortality Cases Due to IAP by Specific Age Group, 2003Table 18 - Overview of Costs and Impacts, Time Horizon of Modeled ImpactsTable 19 - Benefit-Cost Ratios of Converting to a New Stove Technology to Control IAP in the Philippines.Table 20 - Levels of Households According to Access to Water and Sanitation FacilitiesTable 21 - Responses to the Demographic and Health Survey, 2003Table 22 - Attributable Fractions (AF) for WSH-related Illnesses, 2003Table 23 - Total Cases of WSH-related Illnesses, 2003Table 24 - Number of Cases of Diarrhea by Age Group, 2003Table 25 - Number of Cases of WSH-related Illnesses (excluding Diarrhea) by Age Group, 2003Table 26.A -Mortality Cases due to WSH by Specific Age Group, 2003Table 26.B -Mortality Cases due to WSH by Specific Age Group, 2003Table 26.C - Mortality Cases for Malnutrition caused by Diarrhea for Children under 5 years old, 2003Table 27 - Malnutrition-related Mortality Resulting from Diarrheal Infection, 2003 5
  6. 6. Summary Perhaps one of the most important and urgent issues that the Philippines facestoday is that of environmental health. Defined to be the area of health concerns due topollution and unsanitary conditions, it has caught the attention of government, promptingthe national leadership to create an inter-agency committee focusing on these healthissues; to bring forward an agenda of technical collaboration, information collection anddissemination, and policy review. This study on environmental health issues in the Philippines was conducted toprovide guidance—in terms of information and suggestions on policy interventions—topolicy managers and researchers, and donor agencies. There are three areas of focus:urban outdoor air pollution (OAP), household indoor air pollution (IAP), and waterpollution, sanitation and hygiene (WSH)(including WSH-related child malnutrition). Itgathered the available data from different published data sources in the Philippines onmorbidity and mortality, to calculate the number of cases, and the correspondingeconomic costs to the country in terms of lost productivity, direct costs to households,and public funds used to subsidize treatment costs. A comparative summary of theeconomic valuation of the environmental health costs of these three is presented below inFigure 1:Figure 1 – Comparative Summary of the Economic Costs of WSH, IAP, and OAPHealth Effects, 2003 Water, Sanitation and PhP 102.5 B Hygiene (including u5 PhP 51.0 B ($1.9 B) Malnutrition) ($ 0.9 B) PhP 60.6 B Outdoor Air Pollution PhP 5.1 B ($1.1 B) ($0.1 B) PhP 23.6 B Indoor Air Pollution PhP 4.7 B ($0.4 B) ($0.1 B) 0 20 40 60 80 100 120 Morbidity + Mortality (HCA) Morbidity + Mortality (VSL) Source: Author’s calculations As reflected in Figure 1, two methods were used to calculate the economic costsof premature deaths: the human capital value (HCV) and the value of statistical life(VSL)—the results were used as the lower and upper bounds of the economic cost of 6
  7. 7. mortality. The HCV is the economic cost to society of premature death in terms of lostcontribution to production of an individual. The VSL , on the other hand, is based onindividuals’ willingness-to-pay for a reduction in the risk of death. The cost-of-illness(COI) approach is used to estimate the cost of morbidity and is based on the costs oftreatment and the lost income from being ill. It must be noted that this report madeadditional calculations to estimate the economic costs of malnutrition-related deathsresulting from diarrhea in children under 5 years old. The analysis was limited to this agegroup as there were no data on the other age groups that could be used to estimatepremature deaths from diarrhea-induced malnutrition mortality for these groups ofindividuals. The results indicate that the economic costs of pollution and sanitation-relatedhealth effects are high and cannot be ignored. The combined costs for all three sectors in2003 totaled PhP 42.4 billion (USD 783.2 million) in lost productivity due to prematuredeaths or PhP 168.4 billion (USD 3.1 billion) in terms of value of statistical life (Table1). In addition, the cost of morbidity was PhP 18.3 billion (USD 337.6 million),comprising of loss in productivity totaling PhP 10.4 billion (USD 191.3 million), directcosts to Filipino households to treat these illnesses totaling PhP 6.4 billion (USD 118.7million), and the cost to the government health care insurance system—representing thesubsidy for PhilHealth members’ hospitalization costs—and for general governmentsubsidy for publicly-owned health facilities was close to PhP 1.5 billion (USD 27.6million).Table 1 – Summary Table of Economic Costs Breakdown per Sector (USD’000) Water, Sanitation and Indoor Air Outdoor Air All Sectors Hygiene Pollution Pollution (including u5 Malnutrition)Economic Cost (in USD‘000)Morbidity 18,727 11,327 307,583 337,638Mortality (HCV) 68,017 82,702 632,474 783,192Mortality (VSL) 415,975 1,107,532 1,584,394 3,107,900Morbidity and 86,744 94,029 940,057 1,120,830Mortality (HCV)Morbidity and 434,702 1,118,859 1,891,977 3,445,538Mortality (VSL)Economic Cost as Percentage of GNIMorbidity 0.02 0.01 0.31 0.34Morbidity and 0.09 0.09 0.94 1.12Mortality (HCV)Morbidity and 0.43 1.12 1.89 3.45Mortality (VSL)Source: Author’s calculations based on published data sets and empirical studies. Theinformation on malnutrition was based on the calculations of B. Larsen. 7
  8. 8. A comparison of the economic costs for all three sectors (including malnutrition-related health effects in children under 5 years old from WSH) indicates that the mostpressing issue in environmental health is water, sanitation and hygiene, costing thePhilippine society almost USD 1-2 billion per year (HCV and VSL estimates for cost ofdeaths) representing more than 33 million cases of illness and 22 thousand deaths in2003. Outdoor air pollution comes in second with USD 94 million to USD 1 billion ineconomic costs, registering close to one million cases of respiratory illness and over 15thousand premature deaths. Indoor air pollution comes next, costing the Philippinesociety USD 87 to 434 million in 2003, resulting from nearly half a million cases of IAP-related illnesses and almost 6 thousand deaths due to exposure to indoor air pollutionfrom household use of solid fuels for cooking. (Details of these figures are in Tables 2and 3). Tables 2 and 3 show us that OAP and IAP-related deaths are heavily skewedtoward adult and working age groups, while deaths resulting from WSH are in theyoungest members of society. This has implications in terms of vulnerability assessment,policy prioritization, and target-setting.Table 2 – Summary of Mortality Cases per Sector and Age Group, 2003 Water, Under-5 Indoor Air Outdoor Air All Age Group Sanitation and Malnutrition Pollution Pollution Sectors Hygiene from WSHYounger than 1 653 199 2,048 3,719 6,6201 to 4 632 194 8,502 3,897 13,2255 to 14 0 0 1,637 0 1,63715 to 19 19 0 135 0 15420 to 29 82 0 189 0 27130 to 64 1,890 5,588 1,043 0 8,52065 and older 2,492 9,369 851 0 12,711Age not reported 4 17 2 0 23All Age Groups 5,772 15,367 14,406 7,616 43,161Sources: The author calculated the mortality cases for OAP, IAP and WSH. For themalnutrition-related numbers, this report used B. Larsen’s calculations.Note: Those entries with zeroes do not mean that there were no cases, but simply thatthere were no available data which could be used to calculate the number of cases forthese age groups. 8
  9. 9. Table 3 – Summary of Morbidity Cases per Sector and Age Group, 2003 Water, Indoor Air Outdoor Air Age Group Sanitation and All Sectors Pollution Pollution HygieneYounger than 1 147,517 259,966 4,766,078 5,173,5611 to 4 244,185 441,859 14,704,145 15,390,1895 to 14 0 256,578 6,170,901 6,427,47915 to 19 716 8,474 277,625 286,81520 to 29 1,173 13,891 455,031 470,09530 to 64 47,746 40,415 6,610,177 6,698,33865 and older 16,435 16,856 478,527 511,818All Age Groups 457,772 1,038,039 33,462,483 34,958,294Source: Author’s calculations Suggested interventions were culled from the existing literature. For outdoor airpollution, the interventions in discussion are those that address emissions from mobilesources such as improved traffic management to lessen travel time, improved inspectionand maintenance systems, additional investments in affordable mass transport systems,and affordable pollution control devices for tricycles and motorcycles. For indoor airpollution and water, sanitation and hygiene, it is apparent that interventions must targetbehavior—cooking practices and ventilation for indoor air2; and hygiene of householdmembers to prevent water and sanitation illnesses. Interventions to involve thecommunities to create and promote low-cost alternative stoves to the current solid fuel-using stoves are suggested. Additional initiatives to increase the access of householdsespecially in the rural areas and the urban poor to a sewage system and clean water areneeded in order to decrease the exposure of the population to pathogens that causediseases.2 It must be noted that cases of indoor air pollution-related illnesses due to cigarette smoking is not part ofthe study. Hence, cigarette-smoking as a risk factor is not mentioned. 9
  10. 10. Introduction One of the clearest indicators of the state of the environment in the Philippines isperhaps the magnitude of the cases of pollution-related illnesses. The Philippines, being acountry with increasing productive activities fueled by a growing population, is squarelyconfronted with the impacts of pollution on human welfare—a pollution-welfare nexus—which take on several forms: availability of income opportunities, access toenvironmental services, and in recent times, on human health. Among the areas ofconcern within the pollution-welfare nexus, it is the human health angle that has capturedthe attention and alarm of policy managers because of its growing incidence, and theburden that it forces the poorest members of society to shoulder as a result of it. Environmental health—the area of health concerns arising from poorenvironmental quality, causing disease, injuries and deaths—is a serious and pressingissue in countries such as the Philippines, which is still finding that point of sustainableeconomic growth. It is an important enough issue that the Philippine government enactedand adopted Executive Order (E.O.) 489 which created an inter-agency committee onenvironmental health to establish and bring forward an agenda of technical collaboration,information collection and dissemination, and policy review. As part of the support for the country to plan and develop programs that areconsistent with addressing the problems in environmental health in the Philippines, theinformation and analyses contained in this study have been carefully collected. Theobjective is to aid policy makers understand how the country is faring in environmentalhealth issues; and determine what these health problems are costing the country in termsof loss in productivity and direct costs to households. This study on environmental healthquantifies and analyzes the bio-physical dimensions of environmental degradation andlikewise determines the social costs of environmental degradation; and the potentialeconomic benefit of environmental improvement as they relate to environment-relatedhealth effects. In addition, potential priority interventions—as suggested by the existingliterature— is examined to determine the feasibility of each in addressing theenvironmental health issues in the Philippines. These health effects of poor environmental quality negatively impact humanwelfare (and ultimately, the welfare of society) by lowering the quality of life forindividuals afflicted with these health effects—which is represented by the lost incomeopportunities as a result of being ill, and the opportunity cost of income that has to bespent on treatment and care—and the loss of valuable and productive members ofsociety—as measured either by a permanent loss in productivity as a result of death (thehuman capital value), or by the willingness-to-pay of individuals to reduce the risk ofdeaths resulting from these illnesses (the value of statistical life approach). There are three areas of specific interests that will be discussed: 1) urban outdoorair pollution; 2) household indoor air pollution; and finally, 3) water pollution, sanitationand hygiene. The primary research objectives are to determine and quantify the economiccosts of environmental degradation—focusing on these three areas—in terms of theirimpacts on the health of the citizens of the country, and to evaluate the economic 10
  11. 11. feasibility and efficiency of potential interventions. There is a particular interest inevaluating environmental health in the context of poverty and other high risk groups suchas women and children. The poor are the most susceptible members of society to thehealth risks posed by a degraded environmental quality, because they lack the necessaryresources for disease prevention and treatment. Women and children are in a similar riskyposition because they do not have the same health-care opportunities and access toeducation and information that adult men possess. To calculate the economic impacts of morbidity arising from environment-relatedillnesses, the fundamental approach used was the cost-of-illness (COI) valuation method.This necessitated a determination of the different treatment-seeking behaviors ofFilipinos, and an estimation of the corresponding medical costs attributable to each. Inaddition, productivity losses were calculated by estimating a reduction in gross nationalincome as a result of missed days from work resulting from illness. To these numbers,the public expenditures on subsidies for health treatment were added to determine thetotal economic costs of environment-related morbidity. The computation of the economic costs of premature deaths caused by pollutionand unsanitary practices proved to be more challenging than the calculations formorbidity costs. This is due to the differing perspectives among scholars on how best toestimate the value of a lost human life. To capture these differences, this study calculatedlower and upper bounds values based on the human capital value approach (HCV) andthe value of statistical life (VSL). The HCV estimates the value of loss of life based on anindividual’s foregone contribution to aggregate income as a result of premature death—measured in terms of per capita gross national income. The VSL, on the other hand, is ameasure of one life lost in terms of how much money people are willing to pay to reducethe risk of death. Which of these two approaches better approximates the cost of loss ofhuman life as a consequence of environment-related illnesses is not for this report todecide on. But whichever that may be, the fact remains that many people could havelived a longer, healthier and more productive life if the risks to life were not increased asa result of a degraded environment. The estimated values of the lives lost presented inthis report—both the HCV and VSL—merely provide a benchmark by which the gravityof these environment-related health causes are represented. The organization of this report is based according to the issues within the areas ofenvironmental health mentioned earlier. The basic idea is to present estimates of theenvironmental health effects of the degradation of the natural environment to aid policymanagers. This information is crucial in evaluating the feasibility of potential policyinterventions and determining which among these interventions promise to deliver thehighest net benefit at the least cost. To the maximum extent possible, the methodologiesand assumptions used to calculate the number of cases of illness and deaths and thecorresponding economic costs were harmonized with the existing World Bank studiessuch as the Philippine Environmental Monitor (PEM) and the Economics of SanitationInitiative in the Philippines (ESI). There were many instances, however, when newinformation were uncovered that could refine the computations in these studies. In thesecases, this study expanded the set of assumptions and modified the methodologies tobuild on the results of these existing research reports. A great deal of effort was exertedto list all the numerous assumptions to guide the reader in understanding the process by 11
  12. 12. which the calculations in this study were made. It is strongly suggested that the readersrefer to Annex 1 for clarifications on the computations. It must be emphasized that great effort was undertaken to review the existingempirical studies on environmental health issues in the Philippines. Wheneverappropriate, comments on the drafts of this report were solicited from some of the authorsof these studies to determine any points of contention and contradiction between theinformation contained in this study and the existing literature on environmental health inthe country. The conclusion is that there are some differences in the numbers of casesand valuation, but these differences are due to the differing scopes of work, assumptions,methodologies used in this report and the other empirical works. This report madedetailed assumptions and modified the standard dose-response methodologies to capturethe different treatment-seeking behavior of Filipinos to estimate morbidity figures. Theresult is a general methodological framework of valuation and analysis that is unique tothe situation in the Philippines. As a final note, the issue of how different is this report from the PEM and ESI—the two most recent initiatives of the World Bank dealing with environmental health—must be squarely addressed. The data used in this study are the same basic data used bythe PEM and the ESI, but its approach in filling data gaps is different because of recentinformation that were not available to the authors of those studies during the time theywere conducting the research. In addition, this report also has a different scope ofanalysis than the PEM and ESI—the PEM focusing solely on the determination of thenumber of cases of illness and deaths while this report took the next step of economicvaluation; the ESI’s economic analysis, on the other hand, was more encompassing thanthis report in relation to sanitation and hygiene, as it included the impacts on non-production activities such as tourism. It is important that the readers and users of thisreport keep these differences in mind, so as not to pit the findings and conclusions of thisreport against those of PEM’s and the ESI’s. Outdoor Air Pollution The deterioration of urban outdoor air quality in the Philippines is at a levelwhere one can visually observe air pollution in major cities such as those in MetroManila. An individual only needs to take public transportation any time of the day andsee black fumes spew out of decade-old buses to get a sense of the tight spot that thecountry faces when it comes to air quality. The threat of poor air quality has alreadyreached the attention of law makers and the average Filipino, prompting Congress to passthe Clean Air Act in 1999 in order to properly address the impacts of mounting airpollution in the country. It is expected that the implementation of the law will translateinto concrete steps both by the public and private sectors to reverse the deterioration ofthe nation’s air quality. There are generally two types of air pollution: outdoor (mobile, stationary andarea sources) and indoor (stoves and cigarette-smoking). Outdoor air pollution is anexternal (to the household) pollutant and often large-scale in its presence, affecting 12
  13. 13. multiple sectors and crossing geographical boundaries. Indoor air pollution is a householdissue attributable to proximity to indoor air pollutants such as smoke from cooking, andcigarette smoke. Between the two types, it is outdoor air pollution that attracts greaterpublic attention. Not surprisingly, this has resulted in a greater awareness among thecitizens and a heightened sentiment of urgency to address. In most instances, however,the discussion on outdoor air pollution has been confined to the experience and issues ofmega-cities, specifically, the high-profile cities in Metro Manila. This due to the fact thatbased on the existing data, the highest concentration of outdoor air pollutant sources—e.g., production plants and factories, private vehicles, buses, public jeepneys and othermodes of public transportation—is in Metro Manila. The main driver of outdoor air pollution is the rapid urbanization, transport andincreasing expansion of manufacturing activities and industrial production in the country.The ADB (2006) reports that the industrial sector in the Philippines grew by an averageof 3.2 percent between 1988 and 2002; and the National Statistics Office (2006) reportsthat close to half (47 percent) of the manufacturing activities in the country occur inMetro Manila, and more than a third (32 percent) are located in the urban centers aroundor close to Metro Manila. This trend, along with the increasing migration from the ruralareas to the urban centers, has caused a heightened demand for services and transportthat—in the absence of effective air pollution management—resulted in degradation ofoutdoor air quality in the cities and other urban areas. It is difficult to pin down in exact terms what the state of air quality is in thePhilippines because of the very limited data collected. The law requires theEnvironmental Management Board (EMB) to monitor air quality in the country, and toestablish an inventory of air emissions every three years. The monitoring, however, hasbeen limited to a review of studies conducted by non-government and internationaldevelopment agencies, limited field surveys, and collation of information from self-monitoring reports submitted by industry members.3 The latest emissions inventory (the2001 Philippine Emissions Inventory) included particulate matter (PM), sulfur oxide(SOx), nitrogen oxide (NO), carbon monoxide (CO), volatile organic compounds, andtotal organic gases (TOGs) from mobile sources (ADB, 2006). The report estimates thatCO contributes the heaviest to total pollution load at 39 percent, followed by NO at 35percent, SOx and PM at 8 percent, TOG at 7 percent and finally, VOC at 2 percent.Regular source apportionment4 analyses, however, are not done by EMB. Apportionmentstudies, instead, are being conducted by two institutions: the Philippine Nuclear ResearchInstitute (PNRI, a government facility) and the Manila Observatory (a non-governmentinstitution). Both of these institutions’ regular apportionment analyses, however, are onlyon the small particulate matter: PM10 and PM2.5 or particulate matters that measure lessthan 10 and 2.5 micrometers in diameter respectively; and the samples are gathered fromstations which are (at present) only in Metro Manila or in close proximity to the area. The3 The law requires that industry members submit periodic self-monitoring reports as part of the conditionscontained in their Environmental Compliance Certificate (ECC).4 Source apportionment analysis determines what the contribution of each source of pollutant to a specificlocation. 13
  14. 14. air quality of a few cities5outside of Metro Manila has been monitored by EMB but hassince stopped in 2006. Given the data availability, this study can only focus on the health impacts thatare associated with particulate matter of sizes 10 and 2.5 micrometers. While it isrecognized that the other pollutants cited earlier have potentially significant impacts onthe health of Filipinos, the data gaps that characterize these other outdoor air pollutantsare too wide to be overcome. Nevertheless, a meaningful assessment—albeit limited—onthe economic impacts of health problems arising from is possible, because there issufficient information on PM10 and PM2.5 levels available; and there is sufficient supplyof technical data—raw PM levels and epidemiological studies that establish the “dose-response” connections between long-term exposure to particulate matter and specificidentified illnesses such as respiratory and cardiovascular ailments. If the reported levels of particulate matter were to be indicators of the state ofhealth effects in Filipinos exposed to particulate matter, then there is indeed a cause forconcern. This report’s estimates on PM10 and PM2.56 in Metro Manila indicate apopulation-weighted average of 72 μg/m3 and 48 μg/m3, respectively for 2003. For urbanareas outside of Metro Manila, the estimates also show values of 38 μg/m3 for PM10 and18 μg/m3 for PM2.5 for the same year. There are no PM values for the rural areas becauseof insufficient data. These numbers are significantly above the guidelines set by theWorld Health Organization (WHO) of 20 μg/m3 for PM10, and 10 μg/m3 for PM2.5. Figures 2 and 3 below illustrate the PM levels data gathered from the differentstations in Metro Manila and one baranggay right outside of Metro Manila (baranggayInarawan in Antipolo; the Good Shepherd (GS) is another station located also inAntipolo). The sites that the Manila Observatory (MO) uses to test and collect data onPM concentrations in Metro Manila show a consistently high level—even if the level hassomewhat declined through the years—of PM concentrations. It must be pointed out thatthe different sites vary in characteristics; the MO categorizes the sites as high, medium,and low mobile source presence. As to be expected, the site at the National Press Office(NPO), which has the heaviest vehicle-density, has the highest PM concentrations; theGood Shepherd site in the city of Antipolo—categorized as the low mobile sourcepresence—registered the lowest PM concentrations. While this is not conclusiveevidence, it does provide some basis to the assertion that vehicles are very likely to be amajor contributor to the high PM levels in the Metro Manila, as well as to the other urbanareas in the country.5 These cities are Indang (Cavite), Batangas City (Batangas), Angeles City (Pampanga), and Los Baños,Laguna. Cebu city is also monitored but only for NO2, SO2, O3, benzene, toluene, and xylene only. (Source:EMB’s National Air Quality Status Report, 2003, as cited in the discussion draft of the Country SynthesisReport on Urban Air Quality Management in the Philippines by ADB).6 The PM10 and PM2.5 average estimates for Metro Manila were calculated using actual data collected bythe Manila Observatory, and weighted according to population around the stations. These stations wereManila Observatory (MO), National Printing Office (NPO), Philippine General Hospital (PGH), GoodShepherd (GS in Antipolo), Pasig, Las Pinas, Valenzuela, Pateros, Taguig, and Inarawan (in Antipolo). TheMO’s data collection was part of the ADB/WHO/DOH project in 2003-04. 14
  15. 15. Figure 2 - Annual Average PM10 Concentrations in cities in Metro Manila and inAntipolo City 100PM10 Level 75 (ug/m ) 3 50 25 0 PO S s O H ig an la na G PG M gu ue w N Pi a Ta nz ar s e La Site In al V 2001 2002 2003Source: Manila Observatory, 2004Figure 3 - Annual Average PM2.5 Concentrations in Metro Manila Annual Average PM2.5 Levels, Metro Manila Source: Manila Observatory 75 2000 PM2.5 Level (ug/m ) 50 2001 3 2002 25 2003 2004 0 MO NPO PGH GS Pasig Las Pinas Valenzuela SiteSource: Manila Observatory 2004Economic Costs of OAP-related Morbidity To estimate the health effects and economic burden caused by exposure toparticulate matter (PM), it is necessary to identify the illnesses that can be feasiblyincluded, and to determine the attributable fractions7 (AFs) of these illnesses from PM.The decision as to which illness to include in this analysis is fundamentally about dataavailability. Two considerations are at hand: the availability of information regardingrisks of becoming ill (for each disease) from exposure to PM, and the availability ofreliable information on the frequency or incidence for each disease. Unfortunately, theinformation is wanting, and this study is thus limited to analyzing the economic burden ofdisease of two health endpoints: acute lower respiratory infection (ALRI, including7 Attributable fractions are defined simply as the fraction or ratio of incidence of illness that can beaccounted or attributed to a certain health risk such as exposure to particulate matter. 15
  16. 16. pneumonia), and acute bronchitis.8 Other diseases that could not be included due to datagaps are chronic obstructive pulmonary diseases (COPD), cardiovascular disease,exacerbation of asthma, lung cancer and possibly tuberculosis. The data on risk ratioswere sufficient to compute the AFs for specific ALRI illnesses, as summarized below inTable 4: Table 4 – Attributable Fractions (AF) for OAP-related Morbidity, 2003 Attributable Health Outcome Fractions Pneumonia* - Hospital cases 0.02555 - Non-hospital cases 0.11297 Acute Bronchitis, under 5 0.42343 Source: Author’s calculations based on Galassi et al (2000) Note: The AFs for pneumonia are adopted from the AFs for respiratory diseases. It must be noted also that the AFs were calculated only for Metro Manila and other urban areas. AFs for the rural areas could not be compute due to insufficient data. The data presented above frame the discussion on the elevated levels of PMconcentration in the country. Comparing the data with the guidelines set by the WHO, itis apparent that the concentrations of particulate matter has consistently been above theguidelines of 10 μg/m3 for PM2.5 and 20 μg/m3 for PM10 during the period the data werecollected. In the absence of mitigating measures that could shield the population fromlong-term exposure, continuously high levels of PM10 and PM2.5 have taken their toll onthe health and consequently, the productivity and welfare of Filipinos. The calculationsshow that the total number of people who have been ill due to outdoor air pollution—specifically from PM emissions—reached more than 1 million Filipinos in 2003. Thiscost the national economy in lost productivity a total of PhP 254.7 million (equivalent toUSD 4.7 million9, as shown in Figure 6) from lost days due to illnesses related to outdoorair pollution (including the lost income of parents who have missed work days to care fortheir sick children). The burden on the households resulting from these illnesses reachedPhP 289.1 million (USD 5.3 million), and an additional PhP 70.0 million (USD 1.3million) in health care subsidy10 from the national government. Table 5 belowsummarizes the morbidity cases of OAP-related illnesses by each group.8 Technically, acute bronchitis is included in ALRI. The data from the Department of Health (DOH),however, list ALRI and acute bronchitis separately. This report is consistent with the distinction betweenthe two.9 The foreign exchange rate used was PhP 54.2 = USD 1.0 which was based on the average exchange ratefor the year 2003.10 The health care subsidy represents PhilHealth payments to its members and subsidy to patients who areadmitted in public-owned hospitals for treatment. 16
  17. 17. Table 5 – Cases of OAP-related Illnesses by Age Group, 2003 ALRI (including Acute Bronchitis Pneumonia) Younger than 1 104,494 155.471 Age 1 to 4 169,618 272,240 Age 5 to 14 60,766 195,812 Age 15 to 19 8,464 10 Age 20 to 29 13,875 16 Age 30 to 64 40,374 41 65 and older 16,844 12 TOTAL 414,437 623,602Source: Author’s calculations Figure 4 – OAP Cost to Households of Treatment (Net of Public Health Care Subsidy), 2003 Acute Bronchitis PhP 100 M 34% ALRI and Pneumonia PhP 190 M 66% Source: Author’s calculations 17
  18. 18. Figure 5 – Government Health Care Subsidy per OAP-Illness, 2003 ALRI and Acute Pneumonia Bronchitis PhP 61 M PhP 9 M 87% 13%Source: Author’s calculationsFigure 6 – Lost Income Due to OAP-related Illnesses, 2003 Acute Bronchitis PhP 85 M 33% ALRI and Pneumonia PhP 170 M 67%Source: Author’s calculations 18
  19. 19. Figure 7 - Total Economic Cost of OAP-related Morbidity, 2003 Acute Bronchitis PhP 194 M 32% ALRI and Pneumonia PhP 420 M 68% Source: Author’s calculations The data in Table 5 indicate that it is the youngest members of society (those thatare 14 years old and younger) that carry the heaviest burden of lower respiratoryinfections due to outdoor air pollution. This is alarming because it hits the potentialproductive members of society during their formative stage, and may impact theproductivity of the future labor force in the Philippines. It should however be noted thatthese estimates are limited to ALRI and acute bronchitis due to data limitations, and donot include cardiovascular disease, chronic bronchitis and other diseases thatpredominantly affect the adult population.Economic Costs of Premature Deaths due to OAP The calculations of the value premature deaths for all the mortality casesattributable to OAP (as well as for IAP and WSH-related illnesses) were done under twosets of definitions of value of premature deaths: 1) value in terms of the lost contributionof the individual to economic activity (HCV or human capital value); 2) value ofstatistical life as measured by how much individuals are willing to pay to reduce the riskof dying. These two approaches yield two different valuations, but it is difficult to assertif one is superior to the other. As a way to establish a range of values of economic orwelfare loss to society as a result of premature death, both of the values computed usingthe HCV and the VSL approaches are presented. The lower bound of the range isrepresented by HCV figures, while the VSL numbers are used as the upper bound. As astarting point to determine this range of values, the mortality cases attributable to OAPare computed, the results of which are presented in Figure 8. Mortality cases per agegroup is also summarized and presented in Table 7. The number of cases is calculated 19
  20. 20. using AFs derived from relative risk ratios (RRs) which are computed using the data fromMO. The RRs and the AFs used for this section are summarized in Table 6 below:Table 6 – Relative Risk Ratios and Corresponding Attributable Fractions forSpecific Illnesses Relative Risks Attributable Health Outcome Metro Fractions Urban Rural (National) Manila Respiratory Mortality, under 5 1.10006 1.03980 1.00000 0.03058 Cardiopulmonary Mortality, older than 30 1.31085 1.13199 1.00000 0.08431 Lung Cancer, older than 30 1.49940 1.20386 1.00000 0.12683Source: Author’s calculations based on collected information on PM concentrations fromthe Manila Observatory, published data from the government, and methodology forestimating mortality adopted from Ostro, 2004. There are no estimates for the age group5-29 because of insufficient data.Figure 8 – Mortality Cases Due to OAP, Grouped According to Working and Non-working Age Groups, 2003 Source: Author’s calculations 20
  21. 21. Table 7 – Mortality Cases due to OAP, by Specific Age Group, 2003 Cardiopulmonary Diseases Lung Cancer (including respiratory diseases )11 Younger than 1 0 199 Age 1 to 4 0 194 Age 5 to 14 0 0 Age 15 to 19 0 0 Age 20 to 29 0 0 Age 30 to 64 498 5,090 65 and older 413 8,956 Not Reported 0 17 Total 911 14,456 Source: Author’s calculations The computations show that in 2003, the total loss in productivity (Figure 9) dueto premature deaths resulting from illnesses caused by outdoor air pollution reached closeto PhP 4.5 billion (USD 82.7 million) or PhP 60.0 billion (USD 1.1 billion) in terms ofVSL. These figures were calculated based on pre-computed attributable fractions andapplied to the total prevalence of each cause of death. The breakdown of the cost ofpremature deaths (using HCVand VSL (in parentheses)) is indicated in the bar-graphbelow (Figure 9):11 This is listed as: cancer of trachea, bronchus and lung; Hypertension with and without heartinvolvement; Angina pectoris, Other forms of ischaemic heart disease; Acute myocardial infarction;Disease of pulmonary circulation and other forms of heart disease; Complications and ill-defineddescription of heart disease; Cerebrovascular disease; aterosclerosis; Acute upper respiratory infections;Influenza; Pneumonia; Acute bronchitis and bronchiolitis; Chronic obstructive pulmonary disease andallied conditions; Pneumoconioses and chemical effects; Pneumonitis due to solids and liquids; Otherdiseases of respiratory system 21
  22. 22. Figure 9 - Cost of Premature Deaths due to OAP, 2003Source: Author’s calculations. The Value of Statistical Life (VSL) estimates are inparentheses.Suggested Interventions Mohanty et al (2004) concluded that particulate matter levels are influenced byseveral factors namely: “vehicle and fuel characteristics, fleet characteristics andoperating characteristics”. Similarly, the PEM (2007) reported that the bulk of the totalquantity of particulate matter in Metro Manila (84 percent) is from mobile sources. Thedata shows that the volume of vehicles that are added yearly into the highways and roadsin country is rising as can be concluded from Figure 10 below. The growth of the numberof vehicles every year has been steady at an average of 12 percent per year, or roughly50,000 new vehicles each year. 22
  23. 23. Figure 10 – New Vehicle Registration (New and Used vehicles) Trend, 2007 Source: Land Transportation Office (www.lto.gov.ph/stats.html) It becomes apparent therefore, that one of the necessary interventions in order tolimit PM emissions (and lessen the number of cases of OAP-related illnesses andpremature deaths) must include vehicle management. This is not to diminish theimportance of stationary sources management to lessen PM emissions, but merely tohighlight a choice in policy interventions based on greater urgency.Inspection and maintenance (I/M) programs A well functioning inspection and maintenance (I/M) program is one of the mostcost effective interventions in abating outdoor air pollution. Vehicle inspection inparticular strengthens the enforcement of emission standards as well as increases in thedemand for vehicle repair and maintenance (Kojima and Lovei, 2001). Subida, et al(2005) report that for Metro Manila, maintenance of vehicles and inspection system(MVIS) is one of the more effective interventions they have examined. The implementation of an effective I/M program is not without cost as it entailsspecific activities to make it work. Gwilliam, et al (2005) conclude that an I/M programmust be able to target gross polluters, which requires an examination of thecharacteristics of the vehicle fleet. The program therefore requires superior managementand technical backstopping. All of these necessitate that a successful I/M program aninvestment on training and regular data collection. In addition, the I/M program must becomplemented by laws and checks and balance to ensure that it is not tainted bycorruption and politicking. Like any program, corruption and politicking would weakenthe enforcement of any of the I/M program’s policies, and will surely result in aneventual breakdown. A review of the existing initiatives in the Philippines that address outdoor airpollution indicates that positive steps have been taken. Indeed, there have been marked 23
  24. 24. declines in the PM levels in Metro Manila despite the increasing number of vehicles inthe region. This is attributed mainly to the government’s phase out of leaded gasolinewhich has been successfully implemented. In addition, the emission standards weretightened to comply with Euro 2 standards. The government also continues to review andrevise the allowable emission limits for vehicles equipped with compression ignition andspark ignition. This should significantly limit increases in particulate matter levels fromthe mobile sources. Currently, the country also has an existing Motor Vehicle Inspection System(MVIS) which requires motor vehicles to pass emission testing prior to registration.Emission testing is performed either by private emission testing centers (PETCs) or bythe LTO. For private vehicles, there are over 300 PETCs all over the country that conductthe emission testing while for public utility vehicles, the LTO MVIS is offering emissiontesting services at lower costs (EMB-DENR, 2005). The Philippines also has an existing smoke belching program that was establishedto enforce motor vehicle emission standards through roadside inspection andapprehension of violators. Teams which were trained by a multi-agency group led byMMDA and LTO implements the initiative (EMB-DENR, 2003). On the ground, thisprogram could be improved with solid support from the local government units. Localordinances, capacity building, and roadside apprehension are best handled by themunicipal and city governments. The benefit-transfer BCA of an inspection and maintenance program for dieselvehicles done for the Philippines by Larsen (2008) reflects a B-C ratio of 3.9. Thisindicates that in terms of health benefits (averted loss in human lives), sound maintenanceand inspection program delivers almost four times the cost of implementing such aprogram. This supports conventional wisdom regarding the need for sufficient andeffective vehicle emission monitoring and regulation to address air pollution from mobilesources.From two-stroke tricycles to four-stroke tricycles The popularity of the two-stroke tricycles in the country is a major concern, airpollution-wise. Many motorcycle-drivers prefer the two-stroke over its four-strokecounterpart because they are more powerful, and often times less expensive. Tricycles—which oftentimes are two-stroke, and a very popular mode of public transportation—areubiquitous and will most likely remain popular in generations to come. The social cost ofusing two-stroke tricycles, however, remains unaddressed satisfactorily. Aside from thenoise pollution they create, a significant volume of particulate matter is from these two-stroke tricycles. The challenge is how to approach this emission problem and create anincentive system to entice two-stroke drivers and owners to switch to less pollutingmodes of transportation, or at the very least, to properly maintain their motorcycles andreduce emissions. With barely minimum wage, the tricycle drivers do not have enoughmoney for tricycle maintenance. There is also very little incentive to conductmaintenance operations since most tricycle drivers do not own the units they drive. Moreoften than not, an operator owns the tricycle units and a single unit is being shared bythree to four drivers (Camagay, et al, 2005). 24
  25. 25. The social benefit of the switch is potentially large. In the strategy scenariosevaluated by Subida et al (2005), switching from the two-stroke to the four stroketricycles (4-STC) under several assumptions will result in an 80 percent reduction in PMemissions from these vehicles. Realistically, however, switching from 2-stroke to 4-stroke tricycles for the Philippines is very difficult, although not impossible. The biggestissue is cost, not just in terms of providing the funds to help finance the switch, but alsoto promote the acceptability of the program among the citizens by providing informationand awareness. In the short-run, the government can do a bit more drastic action by, forexample, banning the introduction of new two-stroke tricycles into the system whileproviding inspection and maintenance services to the existing two-stroke tricycles.Owners of “retiring” two-stroke vehicles should also be encouraged to make the switch;but this entails financing. As an example, the city government of San Fernando in LaUnion offered a loan package to encourage the shift from two-stroke tricycles to 4-STCs.Tricycle operators were offered an interest-free loan amounting to P9,000 payable withinone year for the down payment on the purchase of 4-STCs. Old two-stroke tricycles withage ranging from 20 years old and above were phased out (San Fernando CityGovernment, undated). As of July 2005, a total of 643 two-stroke units were convertedinto 4-strokes, of which 97 units received financial assistance (Ortega, undated).Installation of pollution control devices Larsen (2008) used benefit-transfer to determine if retro-fitting of in-use dieselvehicles with diesel oxidation catalysts (DOC) or diesel particulate filters (DPF) makeseconomic sense for the Philippines12 (Refer to Annex 2 for the complete paper). Usingthe experience of Mexico, Peru, and Senegal as the basis for the analysis, the benefit-costanalysis indicates that the benefits (in terms of the economic values of averted prematuredeaths calculated using VSL) of a retro-fitting program more than outweigh the averagecosts of adopting the technologies for diesel vehicles. A summary of the BCA results forretro-fitting of in-use diesel vehicles in the Philippines is shown below13:12 Effective functioning of DOCs and DPFs requires diesel with a maximum sulfur content of 500 and 50ppm, respectively.13 Larsen applies a VSL of US$109,000 to the Philippines (reflecting GNI per capita in 2007) for valuationof mortality. 25
  26. 26. Table 8 - BCA-ratios for Cases of Retro-fitting of In-use Diesel Vehicles in the Philippines Diesel Oxidation Catalysts (DOC) BCA Ratio Old buses 6.54 Large buses 6.74 Buses 4.12 Newer buses 2.97 Old delivery trucks 2.23 Newer delivery trucks 1.81 Diesel Particulate Filters (DPF) High usage taxis 5.30 Old buses 2.80 Large buses 2.89 Newer buses and delivery trucks 1.47 Source: Larsen, 2008. Vehicle emission technologies are useful short term interventions while thecountry is building capacity, awareness and adoption of cleaner fuels. As such, a nationalprogram that requires vehicles (new and in-use), especially public utility vehicles such asthe jeeps, buses and tricycles—to install pollution control devices must be implemented. There are several pollution control devices being offered in the market today.Kojima and Lovei (2001) note that for gasoline powered vehicles, catalytic converters arethe most effective in reducing exhaust emissions. As much as 95% reduction in CO andhydrocarbon emissions and around 75% NOx reduction can be achieved if the three-waycatalytic converters are efficiently used. However, according to Kojima and Lovei(2001), there are several pre-requisites for this option to work successfully: wide use ofunleaded gasoline; low sulfur level in gasoline; emission standards and adjustment periodto meet these standards; and effective I/M programs. Along with improvement in fuelspecifications, particulate traps or filters can also be used for diesel powered engines.Buses and jeepneys can be fitted with particulate traps to reduce emissions. Cost is one of the main concerns regarding the implementation of thisintervention. Vehicle emission technologies entail additional costs to vehicle owners.Moreover, given certain technologies, lower emissions come at the price of fuelefficiency making installation of emission technologies even more costly. While newervehicle imports come with installed catalytic converters, the problem lies with oldervehicles (Gwilliam, et al., 2005). One way to encourage owners of vehicles (especiallythe old units) to install pollution control devices is to strictly implement compliance withemission standards. If emission standards are being strictly enforced through a wellfunctioning I/M system, vehicles owners are left with no choice but to install pollutioncontrol devices to avoid apprehension or the risk of the vehicle units not being registered. 26
  27. 27. In addition, the government can remove the barriers that prevent the entry of anti-pollution technologies or impose lower tariffs (if not zero) on the importation of emissiontechnologies to help ease the price in the domestic market (Kojima and Lovei, 2001).Rehabilitation of Current Traffic Management System Traffic congestion is a ubiquitous phenomenon in the major cities in thePhilippines. The length of time a vehicle is on the road is the most significant factor inthe contribution of the vehicle to particulate matter emission. As such, the minimizationof traffic in the country will improve the level of particulate matter released by vehiclecombustion in the air. The current traffic management system in the Philippines hasimproved the traffic situation in the country—especially in Metro Manila—but additionalefforts are needed to completely eliminate regular traffic congestion in the major cities.To illustrate the potential of traffic management, a study conducted in Bangkok andKuala Lumpur in 2004 revealed that the reduction in emissions from the installation of 3-way catalytic converters in 50% of the cars in these cities can be achieved by increasingvehicle speed from 12-15 km per hour to 30 km per hour (Kojima and Lovei, 2001). Strategies that can greatly improve flow of traffic include the following:coordinated signals/traffic lights, channelization, reversible lanes, one-way street pairs,and other traffic control device, area licensing schemes, parking controls, exclusivepedestrian zones, vehicle bans (Faiz, et. al, 1990); and segregated busways (Gwilliam, et.al, 2005). Potential of traffic management in reducing pollution is no doubt very effective inthe short run but caution should be exercised in the long run. Reduced travel timeencourages more trips and thus translates into higher emissions. For example, afterincreasing capacity of road networks in United Kingdom and United States additionaltraffic was generated. About half of the 2.7 percent growth in traffic in the US can beattributed to the additional roads that were constructed. Traffic management is onlyeffective to the extent that it does not create additional traffic. When it does, policies toredirect traffic flow, especially away from environmentally sensitive locations should beenforced (Kojima and Lovei, 2001).Investments in Additional Mass Transport System Investments in additional mass transport systems such as additional electric trainswill significantly reduce the public’s reliance on jeepneys and tricycles which arenotorious for outdoor air pollution emissions. Currently, there are three light rail transitlines in operation/available in Metro Manila, which service the population of themetropolis daily as described below in Table 9: 27
  28. 28. Table 9 - Light Rail Transits Lines in the Philippines Length/RidershipLRT Line 1 15-km line / 300,000 passengers per dayLRT Line 2 13-km / 200,000 passengers per dayEDSA-MRT 17-km / 400,000 passengers per daySource: ADB, 2006. A number of authors have suggested the use of trains and railways as an effectivestrategy combating air pollution (Gwilliam, et al., 2005; Ostro, 2004; Kojima and Lovei,2001; Subida, et al., 2005). By expanding the railway network, it is expected that thenumber of commuters using the LRT/MRT will increase. With a larger number of thepopulation using non-motorized transport, volume of traffic will be reduced and thus helpin lessening outdoor air pollution. The projections made by Subida, et al (2005) showthat in 2015 (under several assumptions), the use of metro railways will generate 18.2percent and 13 percent reduction in SPM and CO2 emissions respectively. The costs ofthis intervention, on the other hand, are summarized below in Table 10:Table 10 - Proposed Railway Projects with project costs (in USD millions)Railway Route Distance Fixed Cost Variable Cost TOTALLine (km) (Operating and Maintenance)LRT line 6 South extension of 30 km 600 750 1,350 line 1MRT line 3 North Ave- 12 km 306 261 567extension Navotas; Taft- ReclamationMRT line 2 Recto-North 15.7 km 351 182 533(east west harbor; Santolan-extension) MasinagMRT line 2 Masinag-Antipolo 22.8 km 288 150 438MRT line 4 Recto-Novaliches 26 km 724 646 1370North Rail PNR line 45.5 km 589 649 1238MCX PNR Line 554 996 1550Total Cost 3,412 3,634 7,046Source: JICA in Subida, et al, 2005. However, there are several issues that need to be addressed when implementingthis intervention. First, MRT and LRT operations are financed heavily by governmentsubsidies. The Inquirer reported that MRT for example receives approximately P6.8 28
  29. 29. billion subsidies per year. This put a lot of pressure on the fiscal position of thegovernment. Therefore, to prevent perverse use of subsidies, great caution should beexercised during project conceptualization and contract design. For the proposed railwayprojects, the government should avoid taking on risks beyond its control to preventincurring huge amount of contingent liabilities. Second issue is the setting of fare rates. In theory, the fare rate should reflect thetrue costs of service being provided. However, this is not a viable option in practice forseveral reasons: political and demand elasticity considerations. Focusing on the MRT, the fare rate has been set very low, revenues from whichare not enough to cover the operating expenses. Table 11 shows the financial summary ofMRT Line 3 Operations.Table 11 - Financial Summary of MRT Line 3 Operations (in million pesos) CY 2003 CY 2004 CY 2005Total Expenses 6,500.00 6,700.00 8,000.00Revenues 1,600.00 1,800.00 1,900.00 Development Rights revenues 12percent 17percent 17percent Farebox revenues 88percent 83percent 83percentAmount being subsidized by the P44.23 P39.94 P49.57Government per passenger $0.88 $0.8 $0.99Total Ridership 112,653,067 122,483,642 121,753,952Source: Morales-Mariano (http://www.cleanairnet.org/baq2006/1757/docs/SW7_2.ppt) In order to make the operation of an additional MRT feasible, it would benecessary to increase the current fare and reduce the subsidy that the government pays tokeep it afloat. Morales-Mariano (http://www.cleanairnet.org/baq2006/1757/docs/SW7_2.ppt)suggested that the optimal fare rate is around PhP 14.40-19.90. The average optimal fareof P17.15 generates the lowest subsidy required (PhP 6.449 billion). Increasing the fare toan average of P17.15 will not result to increase traffic volume and road congestion.However, beyond this amount, revenues will begin to decrease as 52 percent of thepassengers will shift to buses and around 2 percent will shift to cars. Martinez and Tolentino (2007) estimated the optimal fare using a sensitivityanalysis. Their study revealed that the optimal fare is around PhP18.15 in 2007. This farerate maximizes farebox revenues and minimizes the subsidy. Beyond this amount,subsidies begin to increase as revenues fall. It is expected that there will be oppositionagainst building another MRT that will be subsidized heavily by government, especiallyif the subsidy is substantial. Without the subsidy, however, the MRT fare would be moreexpensive than the jeepneys and buses that ply the same route, dampening the impact ofthe expansion of the electric train on the particulate matter emission. Additional studiesmust therefore be done to find a solution to the fare increase problem. Finally, a summary of activities related to reducing outdoor air pollution was doneby the Metro Manila Air Quality Improvement Sector Development Program 29
  30. 30. (MMAQISDP) in 2003. These figures were inflated to reflect the current costs of creating the same projects, as shown below in Table 12: Table 12 - Cost Estimates for the Metro Manila Air Quality Improvement Sector Development Program (MMAQISDP) in million USD 2003 Prices 2007 Prices Item FE LC Total FE LC TotalRoad Rehabilitation 19.52 19.52 39.04 28.13506 28.13506 56.2701Traffic EngineeringManagement 9.01 11.64 20.65 12.98652 16.77726 29.7638Ambient Air QualityManagement 10.59 1.96 12.55 15.26385 2.825037 18.0889Public Health Monitoring 0.15 0.01 0.16 0.216202 0.014413 0.23062Anti-smoke Belching 0.5 0.05 0.55 0.720673 0.072067 0.79274Capacity Building 7.46 5.36 12.82 10.75244 7.72561 18.478Consulting 6.06 5.06 11.12 8.734552 7.293207 16.0278Program Administration 4.61 4.61 0 6.644601 6.6446Contingencies 6.43 6.52 12.95 9.26785 9.397571 18.6654Interest and Other Charges 7.86 7.86 11.32897 0 11.329TOTAL 67.58 54.73 122.31 97.40611 78.88482 176.291Note: FE- foreign exchange;LC- local currency Source: 2002 National Air Quality Status Report. The 2007 prices are the author’s own computation given annual inflation rate and exchange rate data from BSP and the 2003 data from the 2002 National Air Quality Status Report. Indoor Air Pollution The WHO estimates indoor air pollution as the 8th most significant risk factor in the global burden of diseases. It contributes around 3.7 percent of the disease burden in developing countries and ranks fourth behind malnutrition, unprotected sex, and water, sanitation and hygiene, as the main causes of premature deaths (WHO websites: http://www.who.int/ indoorair/health_impacts/burden_global/en/index.html; http://www.who.int/mediacentre/factsheets/fs292/en/). Indoor air pollution-related illnesses result from both short and long-term exposure to smoke inside the home—smoke that originates from cooking with solid fuels, cigarette smoking and other sources. In this study, however, the focus in is only on households’ solid fuel use as the source of indoor air pollution. The choice of solid fuel use as the basis of the analysis is borne of the practical consideration—the data are available on solid fuel use, but no sufficient data on cigarette smoking inside the home— 30
  31. 31. and the appropriateness and rationale for intervention. The WHO reports that the impactof indoor air pollution (from solid fuel use for cooking) on individuals’ health issignificant, causing an estimated 1.6 million deaths globally due to respiratory diseasesand lung cancer. Public health specialists who were interviewed for this report believe thatcigarette smoke is the largest contributor to indoor air pollution; even as theyacknowledge that smoke from cooking fuel is a significant source of IAP as well. Thereis no sufficient data on cigarette smoking—i.e., epidemiological studies that estimated therelative risk ratios for cigarette smoking in the Philippines—in the household to conductan economic analysis. As such, this study is limited to analyzing the impacts of exposureto smoke from fuel used for cooking even as the author acknowledges the importance ofcigarette smoke on the deterioration of human health in the Philippines14. But despite theidea that solid fuel is only secondary to cigarette smoke as the sources of indoor airpollution, its impact on health and life is huge. It is expected, however, that as more databecome available (particularly, technical and household data on the impacts of exposureto cigarette smoking in the homes) that these valuations will be revised to include theseinformation. We begin the formal discussion by characterizing solid fuels—at least based onhow it is defined in this report. Desai, et al. (2004) defines solid fuel use as “thehousehold consumption of biomass (dung, charcoal, wood, or crop residues), or coal.”Results of the 2004 Household Energy Consumption Survey (HECS) show that thepercentage of households using electricity and LPG increased from 1995 to 2004 whilethe percentage of household using fuelwood, charcoal, kerosene and other biomass fuelsdeclined as illustrated in Figure 11 below:Figure 11 – Percentage of Households Use of the Type of Cooking Fuel, 2004 100 75 50 25 0 Electricity LPG Gasoline Diesel Kerosene Fuelwood C harcoal Other Biomass Residue 1995 2004 Source: Household Energy Consumption Survey, 200414 Another limitation of the study is that it does not include the incidence of IAP-related illnesses in theworkplace. The focus of this section is solely on the household members’ exposure to smoke from cooking,which in turn is based on the use of cooking fuel, cooking practices and ventilation of the home. 31
  32. 32. The literature on indoor air pollution suggests that the bulk of the environmentalburden of disease due to solid fuel is borne by low-income households in rural and peri-urban areas—sectors that typically have inadequate access to clean and affordable fuels.The results of the 1995 HECS presented in Figure 12 show that solid fuel use is indeedhigh in rural areas. The 2004 HECS data however, do not include a classification ofhouseholds according to urbanity, but nevertheless supports the claim that a big portionof poor households use solid fuel such as wood, charcoal and other biomass residue(Figure 13). Additional information is needed to verify if it is the rural poor or the urbanpoor that is exposed to air pollutants from solid fuel use. Anecdotal evidence, however,point to the incidence of solid fuel use to be higher in the rural areas this is the traditionaluse of fuel in the rural sector, and this is also the cheapest and most accessible cookingfuel available.Figure 12 – Household Fuel Use by Urbanity, 1995 Household Fuel Use, By Urbanity, 1995 100% Percentage of households 75% Philippines 50% Urban Rural 25% 0% Electricity LPG Gasoline Diesel Kerosene Fuelwood Charcoal Biomass Residues Source: Household Energy Consumption Survey, 1995. 32
  33. 33. Figure 13 – Household Use of Solid Fuel by Income Class, 2004 PhP25,000 and over PhP15,000-24,999 PhP10,000-14,999 PhP5,000-9,999 Less than PhP5,000 0% 25% 50% 75% 100% Fuelwood C harcoal Other Biomass ResidueSource: Household Energy Consumption Survey (HECS), 2004. The data on PM emissions from solid fuel use is wanting in the Philippines. Onemajor source is the ADB (2004) which looked at the indoor PM10 levels in rural andurban households. It did not have, however, a definitive conclusion on the sources of PMlevels within the household. It is also difficult to assess without additional analysis if thePM levels found inside homes are from the “trans-boundary” movements of fumes fromoutdoor air pollution sources. Based on the available information reviewed for this report, it is hard to make adefinitive conclusion on indoor air PM levels especially since the sites included in thestudies are few—the data collection on the PM10 levels from the indoor sources are doneregularly but not at the ideal level of frequency. Some deductive results, however, can bemade and used to paint a general picture of the link between solid fuel use and exposureto particulate matter. Using data from HECS and combined with emission factorscollected from the different technical literature available, an estimate of PM emissionsfrom solid fuel use of households is calculated. Table 13 summarizes these calculations.Table 13 – Particulate Emissions from Household Cooking, 2004 PM Emission Total PM Fuel Type 2004 Consumption Factor EmissionsFuelwood 10.694 M tons 15.30 g/kg 163,618 tonsCharcoal 0.888 M tons 36 mg/kg 32 tonsBiomass Residues 1.351 M tons 7.40 g/kg 9,997 tonsSource: Author’s estimates based on HECS data. 33
  34. 34. Most health outcomes that have been associated with exposure to indoor airpollution have been limited to children younger than 5, women older than 30, and tosome extent, men older than 30. This trend is borne of the fact that the individuals whobelong to these age groups are the most likely to spend the most time inside the home.With this information at the forefront, particular attention to young children and adultwomen is given, since they are the people most likely to suffer from illnesses caused byindoor air pollution. The estimates done on the number of cases of IAP-related illnessessupport this conclusion, as the discussion in this section will illustrate later. To start off the discussion, this study looks at the existing data on household fueluse, and found that 42 percent of households in the Philippines use fuel wood as theirprimary cooking fuel (Figure 14). To calculate the population that has been exposed toindoor air pollution, we first exclude from the households that used any of the three solidfuels of interest in 2004, but used other energy sources as their primary cooking fuel ayear prior to the actual survey. Figure 15 shows that a little more than 48 percent of thehouseholds in the country are exposed to indoor air pollution, based on solid fuels used asthe primary cooking fuel. As expected, the proportion is much higher in the rural areaswhere cooking using biomass and fuel wood, is the traditional and practical method—solid fuel is easily accessible and cheaper in the rural areas than LPG and other cookingfuel.Figure 14– Primary Cooking Fuel for Households, 2004 Others Electricity Charcoal 2.1% 1.3% 7.2% LPG 42.7% Fuelwood 42.0% Kerosene 4.8% Source: Household Energy Consumption Survey (HECS), 2004. 34
  35. 35. Figure 15 – Households Exposed to Indoor Air Pollution (in percentage) Source: Author’s estimates based on HECS data. The numbers in Figure 15 illustrate the prevalence of the use of solid fuel in ruralareas, and that a relatively small proportion of households in Metro Manila can beconsidered exposed to indoor air pollution. However, there is a need to adjust thesefigures by the associated ventilation factors because cooking practices and the structuralcharacteristics of houses in the Philippines may mitigate the exposure of Filipinohouseholds to indoor air pollution and the subsequent health outcomes. Desai, et al.(2004) suggest using a ventilation factor of 0.25 for households that use improved stovesor cook outside, and a ventilation factor of 1.00 for those that use traditional stoves. Aventilation factor of 0.25 means that the health effects of indoor air pollution emanatingfrom cooking fuel are expected to be reduced by three quarters as result of the ventilationconditions. Saksena et al. (2005) summarized these mitigating ventilation conditions tobe based on a variety of factors including the distance of rooms and walls, height ofceiling, size of windows, materials used to build the house, and whether the householduses improved stoves or not. Taking into account the “airiness” of the areas wherecooking is done even if the stoves were traditional, a ventilation factor of 0.25 is used forurban and rural areas outside Metro Manila as households in these areas typically do theircooking outside their houses. Metro Manila households that use solid fuel, however, areassigned a ventilation factor of 0.5 since they would normally be found in informalsettlements where houses are crammed together. With the above assumptions, the proportion of the cases of the health outcomesoutlined above that can be attributed to exposure to indoor air pollution is computed. Toaccomplish this, attributable factors were estimated based on the relative risk ratios—calculated based on gender, age, and specific illness—obtained from several 35
  36. 36. epidemiological studies are used. The pollutant in discussion is PM resulting from thesmoke from solid fuel use in the households. Adjustments on the potency of exposure tosmoke are made by integrating the (significant) impact of household ventilation on thedegree of exposure. The computed weighted-AFs for each health endpoint used in thisstudy are summarized in Table 14.Table 14 – Attributable Fractions Used for Morbidity Cases per Illness Risk Ventilation Attributable Health Endpoint Ratios Factor FractionsAcute lower respiratory infections, children 1.8 0.25 0.1009younger than 5 and women older than 30.Chronic obstructive pulmonary diseases, women 3.2 0.25 0.2359>= 30Chronic obstructive pulmonary diseases, men >= 1.8 0.25 0.100930Tuberculosis, all >= 15 1.5 0.25 0.0656Sources: AFs calculated by author, based on risk ratios from Desai, et al (2004) andDherani et al (2008). The results of the calculations for morbidity cases are shown in Figure 16. Table15 shows in more detail the number of cases of acute bronchitis, ALRI and pneumonia,COPD and respiratory tuberculosis, given the different age groups. It must beemphasized that the estimates of cases (as well as the inclusion of the specific diseases)were based on the available data on relative risk ratios (and the consequent computationfor attributable fractions) and on the total number of cases of each of the diseases.Figure 16 – Morbidity Cases Attributable to IAP, By Gender, 2003Source: Author’s calculations. COPD refers to chronic obstructive pulmonary disease. 36
  37. 37. Table 15 - Cases of IAP-related Illnesses by Age Group, 2003 Acute ALRI and COPD Tuberculosis Bronchitis PneumoniaAge 0 to 4 101,949 289,753 0 0Age 5 to 14 0 0 0 0Age 15 to 19 0 0 0 716Age 20 to 29 0 0 0 1,173Age 30 to 64 18,630 22,842 2,670 3,60465 and older 4,900 8,839 1,558 1,139TOTAL 125,479 321,434 4,228 6,631Source: Author’s calculationsThe Economic Costs of IAP-related Morbidity As with the calculations for the economic costs of OAP, the estimates for thecosts to society and the economy of indoor air pollution related illnesses include directcosts to households (based on treatment-seeking behavior) and the indirect costs (lostincome due to days off from work due to illness). The estimates of economic burdeninclude the cost to the government health care system in terms of subsidy to PhilHealthmembers’ medical costs15 and the per-patient hospitalization subsidy for government-owned hospitals. Figure 17 illustrates the direct treatment costs to households for theindoor air pollution-related illnesses in 2003, while Figure 18 describes the costs that areshouldered by the government.15 It must be noted that only 70 percent of cases in Metro Manila and in urban areas, and 20 percent ofcases in rural areas, are subsidized by the government through PhilHealth. The PhilHealth also indicatedthat only (an average of) 35 percent of costs incurred by its members are paid by the agency. 37
  38. 38. Figure 17 – IAP Cost to Households of Treatment (Net of Public Health CareSubsidy), 2003 ALRI and Pneumonia PhP 415 M 89% Respiratory Tuberculosis PhP 19 M 4% Acute Bronchitis COPD PhP 20 M PhP 13 M 4% 3%Source: Author’s calculations.Figure 18 - Government Health Care Subsidy per IAP-Illness, 2003 ALRI and Pneumonia PhP 177 M 93% Respiratory Acute Tuberculosis COPD Bronchitis PhP 6 M PhP 5 M PhP 2 M 3% 3% 1%Source: Author’s calculations. It is also estimated that the Philippine economy loses the productive contributionof working-age patients when they take time off to get treatment, or to take care of a sickchild. Lost productivity resulting from IAP-related illnesses is calculated based on the2003 per capita GNI of the Philippines, with the figures adjusted for stay-at-home 38