By Dr Edward Pinchbeck
Department of Economics
A growing body of evidence has led to a better understanding of the extensive and pervasive ways in which air pollution affects our health, well-being, and cognitive development. One of the contributions economists have made to this debate has been to estimate the monetary value that people attach to outdoor air quality, for instance using house prices. These estimates have been instrumental to setting policy limits on air pollution levels, such as those in the UK Clean Air Strategy.
In sharp contrast to the progress on outdoor air pollution, the economic costs of indoor air pollution remain almost completely unknown. This is a significant gap in our understanding because in developed countries we typically spend more than 20 hours per day inside. Our new research begins to address this by estimating the costs of radon – an odourless, colourless and tasteless indoor air pollutant which is formed by the natural decay of uranium from rocks and soil.
The costs of radon stem from its effects on health. Radon is the largest source of exposure to natural ionising radiation, which damages human lungs and can cause lung cancer. Globally, exposure to radon at homes and workplaces is estimated to cause tens of thousands of deaths each year, making it the most prevalent cause of lung cancer after smoking.
In a recent working paper, my co-authors and I estimate the costs of radon by examining its effect on the housing market. During the purchasing process, house buyers in the UK are informed whether the house is situated in a ‘radon-affected area’, which is determined by reference to a detailed Public Health England risk map. Essentially, to value radon risk we compare changes in sales price for properties that have been reclassified in 2007 as being at risk to nearby properties that remain unaffected.
We find that exposure to radon risk in England reduces property prices by around 1.6%. This is in line with similar effects found in studies measuring the impact of flooding risk or earthquake risk on property prices. This effect is economically significant – if unmitigated, the presence of radon would reduce the total market value of residential properties in England by around £12 billion.
We also seek to understand who bears the costs of radon risks. We find that residents with higher education, income and social status tend to leave areas that have been reclassified to a higher risk category. This suggests that radon risk disproportionately affects lower socio-economic groups in our society, creating a source of environmental injustice.
Overall, our findings have a number of implications. First, radon risk does have meaningful effects on house values, demonstrating that people are willing to pay to avoid risks related to indoor air pollution. Second, our results imply that publishing radon risk information works in the sense that households do respond to risk maps published by government. However, if left unaddressed, information is not sufficient to ensure that the costs of radon do not fall on the poorest groups in society.
Radon is only one of many indoor air pollutants. The extent to which our findings would hold for other indoor air pollutants is unknown. What is clear is that the health costs of indoor pollution are likely to be high, with the WHO estimating that indoor pollution results in as many as 3.8 million deaths every year. Gaining a deeper understanding of the extent and incidence of the costs of other indoor air pollutants should be a priority.
The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.