Inferring Economic Impacts from a Program's Physical Outcomes: An Application to Forest Protection in Thailand.

Economists typically estimate the average treatment effect on the treated (ATT) when evaluating government programs. The economic interpretation of the ATT can be ambiguous when program outcomes are measured in purely physical terms, as they often are in evaluations of environmental programs (e.g., avoided deforestation). This paper presents an approach for inferring economic impacts from physical outcomes when the ATT is estimated using propensity-score matching. For the case of forest protection, we show that a protection program's ex post economic impact, as perceived by the government agency responsible for protection decisions, can be proxied by a weighted ATT, with the weights derived from the propensity of being treated (i.e., protected). We apply this new metric to mangrove protection in Thailand during 1987-2000. We find that the government's protection program avoided the loss of 12.8% of the economic value associated with the protected mangrove area. This estimate is about a quarter smaller than the conventional ATT for avoided deforestation, 17.3 percentage points. The difference between the two measures indicates that the program tended to be less effective at reducing deforestation in locations where the government perceived the net benefits of protection as being greater, which is the opposite of the relationship that would characterize a maximally effective program.

Tropical countries may be willing to pay more to protect their forests.

Inadequate funding from developed countries has hampered international efforts to conserve biodiversity in tropical forests. We present two complementary research approaches that reveal a significant increase in public demand for conservation within tropical developing countries as those countries reach upper-middle-income (UMI) status. We highlight UMI tropical countries because they contain nearly four-fifths of tropical primary forests, which are rich in biodiversity and stored carbon. The first approach is a set of statistical analyses of various cross-country conservation indicators, which suggests that protective government policies have lagged behind the increase in public demand in these countries. The second approach is a case study from Malaysia, which reveals in a more integrated fashion the linkages from rising household income to increased household willingness to pay for conservation, nongovernmental organization activity, and delayed government action. Our findings suggest that domestic funding in UMI tropical countries can play a larger role in (i) closing the funding gap for tropical forest conservation, and (ii) paying for supplementary conservation actions linked to international payments for reduced greenhouse gas emissions from deforestation and forest degradation in tropical countries.

Unobserved time effects confound the identification of climate change impacts.

A recent study by Feng et al. [Feng S, Krueger A, Oppenheimer M (2010) Proc Natl Acad Sci USA 107:14257-14262] in PNAS reported statistical evidence of a weather-driven causal effect of crop yields on human migration from Mexico to the United States. We show that this conclusion is based on a different statistical model than the one stated in the paper. When we correct for this mistake, there is no evidence of a causal link.

Rice yields in tropical/subtropical Asia exhibit large but opposing sensitivities to minimum and maximum temperatures.

Data from farmer-managed fields have not been used previously to disentangle the impacts of daily minimum and maximum temperatures and solar radiation on rice yields in tropical/subtropical Asia. We used a multiple regression model to analyze data from 227 intensively managed irrigated rice farms in six important rice-producing countries. The farm-level detail, observed over multiple growing seasons, enabled us to construct farm-specific weather variables, control for unobserved factors that either were unique to each farm but did not vary over time or were common to all farms at a given site but varied by season and year, and obtain more precise estimates by including farm- and site-specific economic variables. Temperature and radiation had statistically significant impacts during both the vegetative and ripening phases of the rice plant. Higher minimum temperature reduced yield, whereas higher maximum temperature raised it; radiation impact varied by growth phase. Combined, these effects imply that yield at most sites would have grown more rapidly during the high-yielding season but less rapidly during the low-yielding season if observed temperature and radiation trends at the end of the 20th century had not occurred, with temperature trends being more influential. Looking ahead, they imply a net negative impact on yield from moderate warming in coming decades. Beyond that, the impact would likely become more negative, because prior research indicates that the impact of maximum temperature becomes negative at higher levels. Diurnal temperature variation must be considered when investigating the impacts of climate change on irrigated rice in Asia.

Mangroves protected villages and reduced death toll during Indian super cyclone.

Protection against coastal disasters has been identified as an important service of mangrove ecosystems. Empirical studies on this service have been criticized, however, for using small samples and inadequately controlling for confounding factors. We used data on several hundred villages to test the impact of mangroves on human deaths during a 1999 super cyclone that struck Orissa, India. We found that villages with wider mangroves between them and the coast experienced significantly fewer deaths than ones with narrower or no mangroves. This finding was robust to the inclusion of a wide range of other variables to our statistical model, including controls for the historical extent of mangroves. Although mangroves evidently saved fewer lives than an early warning issued by the government, the retention of remaining mangroves in Orissa is economically justified even without considering the many benefits they provide to human society besides storm-protection services.

Potential economic benefit of cleft lip and palate repair in sub-Saharan Africa.

BACKGROUND: Acceptance of basic surgical care as an essential element of any properly functioning health system is growing. To justify investment in surgical interventions, donors require estimates of the economic benefit of treating surgical disease. The present study aimed to establish a methodology for valuing the potential economic benefit of surgical intervention using cleft lip and palate (CLP) in sub-Saharan Africa (SSA) as a model. METHODS: Economic modeling of cleft lip and cleft palate (CLP) in SSA was performed with retrospective demographic and economic data from 2008. The total number of Disability-Adjusted Life-Years (DALYs) secondary to CLP in 2008 was calculated from accepted clefting incidence rates and disability weights taken from the Global Burden of Disease Project. DALYs were then converted to monetary terms ($US), using both a human capital approach and Value of a Statistical Life (VSL) approach. RESULTS: With the human capital approach, the potential economic benefit if all incident cases of CLP in SSA in 2008 were repaired at birth ranged from $252 million to $441 million. With VSL, the potential economic benefit of the same CLP repair would range from $5.4 billion to $9.7 billion. CONCLUSIONS: Cleft lip and cleft palate can have a substantial impact on the economic health of countries in the developing world. Further studies should be directed at quantifying the economic benefit of surgical interventions and quantifying their costs with an economically sound approach.

Global economic consequences of selected surgical diseases: a modelling study.

BACKGROUND: The surgical burden of disease is substantial, but little is known about the associated economic consequences. We estimate the global macroeconomic impact of the surgical burden of disease due to injury, neoplasm, digestive diseases, and maternal and neonatal disorders from two distinct economic perspectives. METHODS: We obtained mortality rate estimates for each disease for the years 2000 and 2010 from the Institute of Health Metrics and Evaluation Global Burden of Disease 2010 study, and estimates of the proportion of the burden of the selected diseases that is surgical from a paper by Shrime and colleagues. We first used the value of lost output (VLO) approach, based on the WHO's Projecting the Economic Cost of Ill-Health (EPIC) model, to project annual market economy losses due to these surgical diseases during 2015-30. EPIC attempts to model how disease affects a country's projected labour force and capital stock, which in turn are related to losses in economic output, or gross domestic product (GDP). We then used the value of lost welfare (VLW) approach, which is conceptually based on the value of a statistical life and is inclusive of non-market losses, to estimate the present value of long-run welfare losses resulting from mortality and short-run welfare losses resulting from morbidity incurred during 2010. Sensitivity analyses were performed for both approaches. FINDINGS: During 2015-30, the VLO approach projected that surgical conditions would result in losses of 1·25% of potential GDP, or $20·7 trillion (2010 US$, purchasing power parity) in the 128 countries with data available. When expressed as a proportion of potential GDP, annual GDP losses were greatest in low-income and middle-income countries, with up to a 2·5% loss in output by 2030. When total welfare losses are assessed (VLW), the present value of economic losses is estimated to be equivalent to 17% of 2010 GDP, or $14·5 trillion in the 175 countries assessed with this approach. Neoplasm and injury account for greater than 95% of total economic losses with each approach, but maternal, digestive, and neonatal disorders, which represent only 4% of losses in high-income countries with the VLW approach, contribute to 26% of losses in low-income countries. INTERPRETATION: The macroeconomic impact of surgical disease is substantial and inequitably distributed. When paired with the growing number of favourable cost-effectiveness analyses of surgical interventions in low-income and middle-income countries, our results suggest that building surgical capacity should be a global health priority. FUNDING: US National Institutes of Health/National Cancer Institute.

The cost of HIV/AIDS to businesses in southern Africa.

BACKGROUND: Information on the potential costs of HIV/AIDS to the private sector is needed if companies are to be given a financial incentive to invest in prevention and treatment interventions. OBJECTIVES: To estimate the cost of HIV/AIDS to businesses in southern Africa using company-specific data on employees, costs, and HIV prevalence. METHODS: : Six formal sector enterprises in South Africa and Botswana provided detailed human resource, financial, and medical data and carried out voluntary, anonymous HIV seroprevalence surveys. The present value of incident HIV infections with a 9-year median survival and 7% real discount rate was estimated. Costs included were sick leave; productivity loss; supervisory time; retirement, death, disability, and medical benefits; and recruitment and training of replacement workers. RESULTS: HIV prevalence in the workforces studied ranged from 7.9 to 25.0%. HIV/AIDS among employees added 0.4-5.9% to the companies' annual salary and wage bills. The present value of an incident HIV infection ranged from 0.5 to 3.6 times the annual salary of the affected worker. Costs varied widely across firms and among job levels within firms. Key reasons for the differences included HIV prevalence, levels and stability of employee benefits, and the contractual status of unskilled workers. Some costs were omitted from the analysis because of lack of data, and results should be regarded as quite conservative. CONCLUSIONS: AIDS is causing labor costs for businesses in southern Africa to rise and threatens the competitiveness of African industry. Research on the effectiveness of workplace interventions is urgently needed.

AIDS is your business.

If your company operates in a developing country, AIDS is your business. While Africa has received the most attention, AIDS is also spreading swiftly in other parts of the world. Russia and Ukraine had the fastest-growing epidemics last year, and many experts believe China and India will suffer the next tidal wave of infection. Why should executives be concerned about AIDS? Because it is destroying the twin rationales of globalization strategy-cheap labor and fast-growing markets--in countries where people are heavily affected by the epidemic. Fortunately, investments in programs that prevent infection and provide treatment for employees who have HIV/AIDS are profitable for many businesses--that is, they lead to savings that outweigh the programs' costs. Due to the long latency period between HIV infection and the onset of AIDS symptoms, a company is not likely to see any of the costs of HIV/AIDS until five to ten years after an employee is infected. But executives can calculate the present value of epidemic-related costs by using the discount rate to weigh each cost according to its expected timing. That allows companies to think about expenses on HIV/AIDS prevention and treatment programs as investments rather than merely as costs. The authors found that the annual cost of AIDS to six corporations in South Africa and Botswana ranged from 0.4% to 5.9% of the wage bill. All six companies would have earned positive returns on their investments if they had provided employees with free treatment for HIV/AIDS in the form of highly active antiretroviral therapy (HAART), according to the mathematical model the authors used. The annual reduction in the AIDS "tax" would have been as much as 40.4%. The authors' conclusion? Fighting AIDS not only helps those infected; it also makes good business sense.

Obstructed labor and caesarean delivery: the cost and benefit of surgical intervention.

BACKGROUND: Although advances in the reduction of maternal mortality have been made, up to 273,000 women will die this year from obstetric etiologies. Obstructed labor (OL), most commonly treated with Caesarean delivery, has been identified as a major contributor to global maternal morbidity and mortality. We used economic and epidemiological modeling to estimate the cost per disability-adjusted life-year (DALY) averted and benefit-cost ratio of treating OL with Caesarean delivery for 49 countries identified as providing an insufficient number of Caesarean deliveries to meet demand. METHODS AND FINDINGS: Using publicly available data and explicit economic assumptions, we estimated that the cost per DALY (3,0,0) averted for providing Caesarean delivery for OL ranged widely, from $251 per DALY averted in Madagascar to $3,462 in Oman. The median cost per DALY averted was $304. Benefit-cost ratios also varied, from 0.6 in Zimbabwe to 69.9 in Gabon. The median benefit-cost ratio calculated was 6.0. The main limitation of this study is an assumption that lack of surgical capacity is the main factor responsible for DALYs from OL. CONCLUSIONS: Using the World Health Organization's cost-effectiveness standards, investing in Caesarean delivery can be considered "highly cost-effective" for 48 of the 49 countries included in this study. Furthermore, in 46 of the 49 included countries, the benefit-cost ratio was greater than 1.0, implying that investment in Caesarean delivery is a viable economic proposition. While Caesarean delivery alone is not sufficient for combating OL, it is necessary, cost-effective by WHO standards, and ultimately economically favorable in the vast majority of countries included in this study.

The clinical and economic impact of a sustained program in global plastic surgery: valuing cleft care in resource-poor settings.

BACKGROUND: The development of surgery in low- and middle-income countries has been limited by a belief that it is too expensive to be sustainable. However, subspecialist surgical care can provide substantial clinical and economic benefits in low-resource settings. The goal of this study is to describe the clinical and economic impact of recurrent short-term plastic surgical trips in low- and middle-income countries. METHODS: The authors conducted a retrospective review of clinic and operative logbooks from Hands Across the World's surgical experience in Ecuador. The authors calculated the disability-adjusted life-years averted to estimate the clinical impact of cleft repair and then calculated the economic impact of surgical intervention for cleft disease. RESULTS: One thousand one hundred forty-two reconstructive surgical cases were performed over 15 years. Surgery was most commonly performed for scar contractures [449 cases (39.3 percent)], of which burn scars comprised a substantial amount [215 cases (18.8 percent)]. There were 40 postoperative complications within 7 days of operation (3.5 percent), and partial wound dehiscence was the most common complication [16 of 40 (40 percent)]. Cleft disorders constituted 277 cases (24.3 percent), and 102 cases were primary cleft lip and/or palate cases. Between 396 and 1042 total disability-adjusted life-years were averted through surgery for these 102 cases of primary cleft repair. This translates to an economic benefit between $4.7 million (human capital approach) and $27.5 million (value of a statistical life approach). CONCLUSIONS: Plastic surgical disease is a significant source of morbidity for patients in resource-limited regions. Dedicated programs that provide essential reconstructive surgery can produce substantial clinical and economic benefits to host countries.

Costs and benefits of neurosurgical intervention for infant hydrocephalus in sub-Saharan Africa.

OBJECT: Evidence from the CURE Children's Hospital of Uganda (CCHU) suggests that treatment for hydrocephalus in infants can be effective and sustainable in a developing country. This model has not been broadly supported or implemented due in part to the absence of data on the economic burden of disease or any assessment of the cost and benefit of treatment. The authors used economic modeling to estimate the annual cost and benefit of treating hydrocephalus in infants at CCHU. These results were then extrapolated to the potential economic impact of treating all cases of hydrocephalus in infants in sub-Saharan Africa (SSA). METHODS: The authors conducted a retrospective review of all children initially treated for hydrocephalus at CCHU via endoscopic third ventriculostomy or shunt placement in 2005. A combination of data and explicit assumptions was used to determine the number of times each procedure was performed, the cost of performing each procedure, the number of disability-adjusted life years (DALYs) averted with neurosurgical intervention, and the economic benefit of the treatment. For CCHU and SSA, the cost per DALY averted and the benefit-cost ratio of 1 year's treatment of hydrocephalus in infants were determined. RESULTS: In 2005, 297 patients (median age 4 months) were treated at CCHU. The total cost of neurosurgical intervention was $350,410, and the cost per DALY averted ranged from $59 to $126. The CCHU's economic benefit to Uganda was estimated to be between $3.1 million and $5.2 million using a human capital approach and $4.6 million-$188 million using a value of a statistical life (VSL) approach. The total economic benefit of treating the conservatively estimated 82,000 annual cases of hydrocephalus in infants in SSA ranged from $930 million to $1.6 billion using a human capital approach and $1.4 billion-$56 billion using a VSL approach. The minimum benefit-cost ratio of treating hydrocephalus in infants was estimated to be 7:1. CONCLUSIONS: Untreated hydrocephalus in infants exacts an enormous price from SSA. The results of this study suggest that neurosurgical intervention has a cost/DALY averted comparable to other surgical interventions that have been evaluated, as well as a favorable benefit-cost ratio. The prevention and treatment of hydrocephalus in SSA should be recognized as a major public health priority.

Integrated model shows that atmospheric brown clouds and greenhouse gases have reduced rice harvests in India.

Previous studies have found that atmospheric brown clouds partially offset the warming effects of greenhouse gases. This finding suggests a tradeoff between the impacts of reducing emissions of aerosols and greenhouse gases. Results from a statistical model of historical rice harvests in India, coupled with regional climate scenarios from a parallel climate model, indicate that joint reductions in brown clouds and greenhouse gases would in fact have complementary, positive impacts on harvests. The results also imply that adverse climate changes due to brown clouds and greenhouse gases contributed to the slowdown in harvest growth that occurred during the past two decades.