‚ExternE : Methodology and Results‘
Rainer Friedrich
IER, University of Stuttgart
and the ExternE team
www.ExternE .info
External Costs
Definition
An external cost arises, when the social or economic
activities of one group of persons have an impact on
another group and when that impact is not fully
accounted, or compensated for, by the first group.
Aim of the ExternE methodology:
= helps to take into account all externalities in a
consistent way when making decisions
-
Investment decisions
-
Technology assessment (subsidies, research support)
-
Consumer decisions (e.g. by adjusting prices)
-
Cost-benefit analyses, esp. for environmental and
health regulation
-
Green accounting
Basic principles
1) Assessment or weighting of effects should as far as
possible be carried out using quantitative figures and
functions
->ensures transparency and reproducibility
2) Assessment of effects/damage (e.g. health risk), not
of pressures (e.g. emissions of pollutants)
-> relation between pressure and effect is in general
non-linear and
->effects depend on time and site of activity
-> -> Bottom-up approach needed for the complex
pathways: the ‘impact pathway approach’
Impact Pathway Approach – Part 1
Pollutant/Noise
Emission
Differences of Physical
Impacts
Transport and
Chemical
Transformation;
Noise Propagation
Calculation is made
twice: with and
without project!
Quantification of Impacts and Costs
Exposure Response Function:
Additional Years of Life Lost
= 3.9 · 10-5 · DSulfate · Population
Quantified number of additional Years of Life Lost due to
one year operation : 103
Impacts included (I)
Impact Cat.
Human Health
mortality
Human Health
morbidity
Pollutant / Burden
PM10
SO2, O3
Benzene, BaP,
1,3-butad., Diesel
part.
Noise
Accident risk
PM10, O3, SO2
PM10, O3
PM10, CO
Benzene, BaP,
1,3-butad., Diesel
part.
PM10
O3
Noise
Accident risk
Effects
Reduction in life expectancy due to short and long time
exposure
Reduction in life expectancy due to short time exposure
Reduction in life expectancy due to long time exposure
Reduction in life expectancy due to long time exposure
Fatality risk from traffic and workplace accidents
Respiratory hospital admissions
Restricted activity days
Congestive heart failure
Cancer risk (non-fatal)
Cerebrovascular hospital admissions, cases of chronic
bronchitis, cases of chronic cough in children, cough in
asthmatics, lower respiratory symptoms
Asthma attacks, symptom days
Myocardial infarction, angina pectoris, hypertension,
sleep disturbance
Risk of injuries from traffic and workplace accidents
Impacts included (II)
Impact
Category
Building
Material
Crops
Global
Warming
Pollutant / Burden Effects
SO2, Acid
deposition
Ageing of galvanised steel, limestone, mortar, sandstone, paint, rendering, and zinc for utilitarian buildings
Combustion
particles
Soiling of buildings
SO2
Yield change for wheat, barley, rye, oats, potato, sugar
beet
O3
Yield change for wheat, barley, rye, oats, potato, rice,
tobacco, sunflower seed
Acid deposition
Increased need for liming
N, S
Fertilising effects
CO2, CH4, N2O
World-wide effects on mortality, morbidity, coastal
impacts, agriculture, energy demand, and economic
impacts due to temperature change and sea level rise
Amenity losses Noise
Amenity losses due to noise exposure
Ecosystems
Eutrophication, Acidification
SO2, NOx, NH3
Impact Pathway Approach – Part 1
Pollutant/Noise
Emission
Differences of Physical
Impacts
Transport and
Chemical
Transformation;
Noise Propagation
Calculation is made
twice: with and
without project!
Basic Approach of ExternE
Assessment of impacts is based on the
(measured) preferences of the affected wellinformed population
This implies:
- Available information should be explained before
measuring preferences
Basic Approach
Preferences are expressed in, i. e. effects are
transformed into monetary units (€2005)
->allows transfer of values, units are conceivable,
direct use of results in CBA and for internalising via
taxes possible
-> however: ‘utility points’ would give the same
results
Impact Pathway Approach
Pollutant/Noise
Emission
Differences of Physical
Impacts
Transport and
Chemical
Transformation;
Noise Propagation
Calculation is made
twice: with and
without project!
Monetary
Valuation
Valuation methods for non-market goods
Revealed Preference (RP)
behaviour (shown in the past)
Stated Preference (SP)
surveys
Indirect valuation
Direct valuation
assesses costs or efforts that can
be linked to the non-market good
• Contingent Valuation
Method (CVM)
• Hedonic Price Method
• Averting Behavior Method
• Travel Cost Method
• Contingent Behavior Method
• Past behaviour of public
decision makers
• Attribute Based Choice
Modeling (ABCM)
• Participatory approaches
• Surveys for preferences of
public decision makers
Monetary Valuation
Health end-point
Value of a prevented Fatality
Year of Life Lost
Hospital admissions
Emergency Room Visit for respiratory illness
General Practicioner visits:
Asthma
Lower respiratory symptoms
Respiratory symptoms in asthmatics:
Adults
Children
Respiratory medication use – adults and
children
Restricted activity days
Cough day
Symptom day
Work loss day
Minor restricted activity day
Chronic bronchitis
Recommended central unit
values in € price year 2000
1,000,000
50,000 / year lost
2,000 / admission
670 / visit
53 / consultation
75 / consultation
130 / event
280 / event
1 / day
130 / day
38 / day
38 / day
82 / day
38 / day
190,000 / case
Quantification of Impacts and Costs
Exposure Response Function:
Additional Years of Life Lost
= 3.9 · 10-5 · DSulfate · Population
Quantified number of additional Years of Life Lost due to
one year operation : 103
Monetary value
50 000 Euro2000 per Year of Life Lost
Damage costs per year:
5.1 Million Euro2000
Some exemplary results of applying the ExternE
tools:
The results of the ExternE research are the functions and
tools that can be applied to answer individual questions!
Results of applying the tools depend on scenario, site, time
and technology!
Some exemplary results of applying the ExternE
tools:
Possibly important effects that are not (yet) included:
Visual intrusion
Biodiversity losses (eutrophication and acidification),
however new method developed within the NEEDS project
Biodiversity loss (local, however included in Environmental
Impact Study)
Risk of nuclear proliferation and terrorism
Risk aversion resp. treatment of Damocles risks
Quantified External Costs [Euro-Cent / kWh] of a
Coal Fired Power Station (steam turbine)
3
NMVOC
PM10
NOx
2
SO2
CO2eq
1
Fr
an
ce
Be
lg
iu
m
an
y
G
er
m
la
nd
Po
UK
Ita
ly
ai
n
0
Sp
[Euro-Cent / kWh]
4
External Costs of Power Stations [Euro-Cent / kWh]
External Costs [Euro-Cent / kWh]
19 Euro/t CO2, Nitrates = 0.5 PM10, YOLLchronic = 50.000 Euro
6
5
Sites in Germany;
2010 technologies!
4
3
2
1
0
WEC
Offshore
Hydro
Health impacts
PWR,
reproc
PV sc-Si
Crops
Natural
gas-CC
ORCHKW
CHP
Material
PAFC
Lignite,
IGCC
Coal,
IGCC
Coal PFB
Climate change
External Costs of Power Stations [Euro-Cent / kWh]
External Costs [Euro-Cent / kWh]
19 Euro/t CO2, Nitrates = 0.5 PM10, YOLLchronic = 50.000 Euro
6
5
4
3
2
1
0
WEC
Offshore
Hydro
Health impacts
PWR,
reproc
PV sc-Si
Crops
Natural
gas-CC
ORCHKW
Material
PAFC
Lignite,
IGCC
Coal,
IGCC
Coal PFB
Climate change
External Costs [Euro-Cent / kWh]
External Costs of Power Stations [Euro-Cent / kWh]
Sc: Nitrates have no impact to human health
6
5
4
3
2
1
0
WEC
Offshore
Hydro
Health impacts
PWR,
reproc
PV sc-Si
Crops
Natural
gas-CC
ORC-HKW
Material
PAFC
Lignite,
IGCC
Coal,
IGCC
Coal PFB
Climate change
External Costs [Euro-Cent / kWh]
External Costs of Power Stations [Euro-Cent / kWh]
Sc: 50 Euro/t CO2
6
5
4
3
2
1
0
WEC
Offshore
Hydro
Health impacts
PWR,
reproc
PV sc-Si
Crops
Natural
gas-CC
ORCHKW
Material
PAFC
Lignite,
IGCC
Coal,
IGCC
Coal PFB
Climate change
Quantification of Externalities of Heat Supply
CB = condensing boiler, MFH = multi family house, OFM = one family house
External Costs [Euro / GJ]
4
3
2
1
0
Gas-CB
OFH
Solar-Gas-CB
OFH
Health
Gas-CB
MFH
others
Fuel oil-LT
MFH
GHG
Wood chips
MFH
Human Health Effects due to Electricity Production
in the EU25 Countries
Substance
Years of Life Lost
Damage Costs
(Million Euro2000)
PM 10
474 000
35 300
11 000
430
480 000
36 000
(primary and secondary)
03 and SO2
Total (rounded)
Summary
• The ExternE methodology estimates effects of technologies for
energy conversion and assesses them based on preferences of
the affected population for a large number of impact pathways.
• The methodology is already widely used for decision aid in the
fields of energy conversion, transport and environmental
protection.
• Gaps and uncertainties exist, however will be more and more
reduced due to ongoing research (e.g. on pathways involving
toxic substances, heavy metals, biodiversity, water and soil
contamination…)
• More information on the ExternE website:
www.ExternE.info
Relation between ExternE methodology
and Multicriteria Decision Analysis
Both use preferences to weigh effects
Differences:
•monetary vs. non monetary weighting factors
•Preferences of stake holders (or decision makers?)
vs. representative part of population
-> MCDA methodology can be used to close gaps
(further effects, monetary weighting factors); explore
very controversial issues
The aim should be to integrate results of these approaches into
an overall assessment framework !
Problems of MAUA:
-often decision makers are not willing to state their
preferences
- stake holders tend to fix weighting so that the predefined
result results
-As stake holders have different preferences, no overall
decision can be deduced
- for each decision process new factors have to be estimated
Criticisms
It is not appropriate or ethical to compare or express
intangible values in monetary terms
-> explain, that monetary values are not principally
different from other units, but have some practical
advantages
Use of contingent valuation for assessing monetary
values sometimes problematic
-> Use also other methods
Criticisms II
Uncertainties resp. the range of results are so large, that
the results are not useful
-> often not true, as decisions often are robust; in other
cases opportunity for structured discussion
Uncertainties from impact pathway modelling reflect
uncertainty of current knowledge, can be reduced by
further research.
bandwidth of results caused by different assumptions
and hypotheses (interest rate, choice of hypothesis with
regard to exposure-response–relationship, choice of
indicators)
sensitivity analysis
determination of hypotheses to be used by decision
maker
Criticisms III
Gaps, that might contribute significantly to external
costs remain and are neglected
-> extension of considered effects
For very controversial issues a minority might not accept
the result
-> sensitivity analysis, discourse
Use of Multicriteria Decision Analysis and
Participatory Approaches to
Extend/Amend the ExternE Methodology:
Close Gaps, where no monetary value is available
(e.g. social criteria)
Carry out MCA resp. choice modelling (for representative
part of population, decision makers?)
Deal with very controversial issues (nuclear):
Explore and quantify opinion of stakeholders, try to convince
them to quantify and generalise preferences; will result in
range of results according to stake holders
-> Integrate results into a combined assessment framework
Uncertainties of estimations of external costs
Bandwidth of results caused by different assumptions
and hypotheses (discount rate, model for assessing
mortality risks)
sensitivity analysis
Stated preference (esp. participative methods)
Guidelines by decision maker, which
hypotheses/assumptions to be used
 project HEATCO to propose harmonized guidelines for
the transport sector for DG TREN,
recommendations for VSL and discount rates (DG Env)
Preparation of guidelines for the German
‚Umweltbundesamt‘