Economic Valuation for Cost–Benefit Analysis of Health Risk Reduction in Drinking Water Systems

Journal article, 2020

Microbial risk mitigation measures in drinking water systems aiming at preventing gastrointestinal disease can provide substantial societal health benefits if implemented properly. However, the procedure of including and monetising the health benefits in cost–benefit analysis (CBA) has been somewhat scattered and inconsistent in the literature, and there is a need for a comparison of available methods. First, through a literature review, we identified the methods to include health benefits in decision support and to monetise these benefits in CBA. Second, we applied the identified health valuation methods in a case study. In the case study, we investigated if changing the health valuation method could change the rank order of the decision alternatives’ net present values. In the case study a risk-based decision model that combined quantitative microbial risk assessment and CBA was used. Seven health valuation methods were identified, each of them including different aspects of health benefits. The results of the case study showed that the choice of the health valuation method can change the rank order of decision alternatives with respect to their net present values. These results highlight the importance of choosing an appropriate health valuation method for the specific application. Although this study focused on the drinking water context, the identified health valuation methods can be applied in any decision support context, provided that input in terms of the health risk reduction is available.