Canada Wide Standard for Particulate Matter and Ozone: Cost‐Benefit Analysis Using a Life Quality Index

The adverse impacts of particulate air pollution and ground-level ozone on public health and the environment have motivated the development of Canada Wide Standards (CWS) on air quality. In cost-benefit analysis of air-quality options, valuation of reduction in mortality is a critical step as it accounts for almost 80% of the total benefits and any bias in its evaluation can significantly skew the outcome of the analysis. The overestimation of benefits is a source of concern since it has the potential of diverting valuable resources from other needs to support broader health care objectives, education, and social services that contribute to enhanced quality of life. We have developed a framework of reasoning for the assessment of risk-reduction initiatives that would support the public interest and enhance safety and quality of life. This article presents the Life Quality Index (LQI) as a tool to quantify the level of expenditure beyond which it is no longer justifiable to spend resources in the name of safety. It is shown that the LQI is a compound social indicator comprising societal wealth and longevity, and it is also equivalent to a utility function consistent with the basic principles of welfare economics and decision analysis. The LQI approach overcomes several shortcomings of the method used by the CWS Development Committee and provides guidance on the compliance costs that can be justified to meet the Standards.