ABSTRACT
The most common method of evaluating beneficial impacts of environmental policies is cost-benefit analysis (CBA). In the present review, CBA methods for air pollution impacts are reviewed. Three types of air pollution effects are identified, including health, productivity, and amenity. Market valuation, stated preference methods, and revealed preference methods are identified for valuing benefits. Three types of costs are described, including private sector costs, societal costs, and governmental regulatory costs. A benefits valuation approach based on Freeman’s principals is described. A costs valuation approach based on U.S. Environmental Protection Agency and Dixon et al. principals is described. Limitations associated with estimates of benefits and costs are summarized. Input assumptions and results are compared for several existing air pollution control analyses. The importance of CBA in environmental policy studies is discussed. Our conceptual approaches should be useful in analyses of urban air pollution impacts and air pollution prevention policies.