Cost-benefit analysis of interventions
The economic evaluation of health and environmental interventions is becoming increasingly important. In the light of limited funding, such evaluations can provide an important tool to:
- demonstrate the economic return of investments in intervention
- compare the effectiveness of one intervention against another
- help policy-makers allocate their limited budget
With household energy playing such a central role in people’s lives, interventions to reduce indoor air pollution deliver a wide range of benefits in the areas of health, environment and poverty reduction.
Cost-benefit analysis (CBA) offers a method of economic evaluation that values all benefits against all costs. The resulting cost-benefit ratio gives an indication of whether or not the benefits outweigh the costs of an intervention, and hence provides a decision-making tool with a broad societal perspective.
WHO has developed guidelines for conducting a cost-benefit analysis of interventions to reduce indoor air pollution. Due to the complete lack of cost-benefit studies conducted on the topic of indoor air pollution, these guidelines describe how a CBA could be performed in order to identify the potential economic return on investments when cleaner fuels, or cleaner uses of existing fuels, are more widely adopted.
These guidelines provided the basis for a WHO cost-benefit analysis conducted at global and regional levels. The CBA assesses the costs and benefits of three interventions (i.e. liquefied petroleum gas, ethanol and improved stoves) under different scenarios (50% coverage, 100% coverage, 50% pro-poor coverage). The study concludes that the health and productivity gains far outweigh the overall costs of interventions.
- Evaluation of the costs and benefits of household energy and health interventions at global and regional levels
- Evaluation of the costs and benefits of household energy and health interventions at global and regional levels: Summary
A summary article entitled "Evaluation of the costs and benefits of interventions to reduce indoor air pollution" was published in Energy for Sustainable Development, Volume 11, Number 4 in 2007.