Reach: Green grp's economics study weighs complex balance

23 July 2003 10:32  [Source: ICIS news]

LONDON (CNI)--Close reading of the WWF-sponsored study into the cost-benefits of the European Commission's (EC) registration, evaluation and authorisation of chemicals (Reach) proposals suggest that the environmental group may have weighted the balance of economists' findings.

Two of three models used by environmental economists in the recent study* suggest that the costs of implementing Reach may exceed the benefits - a balance of findings that was not pointed out by WWF last week when it announced the report's publication. The WWF said that societal benefits of assumed reduction in illnesses could deliver benefits exceeding the costs to industry of implementing Reach by Euro260bn ($292m) in the European Union (EU) by 2020. 

The environmental economists who undertook the research for WWF - David Pearce and Pheobe Koundouri, of University College London - worked on assumptions that the implementation of Reach would cut disease and premature mortality by 10%. The study notes that the European Commission's (EC) own estimate is of a 8-12 reduction.

The first model the economists employed found that costs could be greater than benefits. The analyses examined health expenditure in the EU and assumed it was spent avoiding and treating illness, and the figures were compared against the cost of Reach. They found that Reach would cost more to implement than the savings gained in reduced healthcare costs.

The second mathematical model added people's own spending to avoid ill health on to basic health care costs. It found, again, that costs could be greater than benefits, though it added that there was "a strong probability that benefits exceed costs".

The third model added in lost productivity caused by ill health and found that "benefits comfortably exceed costs". It used a US model that estimates 10-50% of ill health resulting in lost productivity was due to exposure to chemicals.

However, the study excluded any of the environmental benefits of Reach. The economists concluded: "Overall, our own judgement is that we feel confident that Reach generates net benefits."

* The Social Cost of Chemicals

To see the full report, go to: http://www.wwf.org.uk/news/n_0000000934.asp

By: Will Beacham
+44 208 652 3214

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly