CHILDREN AND THE ENVIRONMENT: VALUING INDIRECT EFFECTS ON A CHILD'S LIFE CHANCES

JASON F. SHOGREN (*) Children can face disproportionately greater risk from environmental hazards because they are kids--smaller bodies, faster metabolisms, shorter attentions spans, less knowledge, and fewer resources. Environmental programs that reduce risks to children produce benefits to society that should be adequately represented so policy makers have more information to help them decide which policies are most worth-while relative to their costs. The open question is just how exactly to value these reductions in risks to children, risks which can arise either from a direct effect on their health, or an indirect effect on their life chances because of illness in other family members or the degradation of the environment. This article focuses on valuing these indirect effects to a child's life chances. The question addressed here is whether standard benefits estimation adequately captures the indirect effects on healthy children. If policy makers presume caregivers make fully informed, rational choices when dealing with adv erse family health, indirect effects are already accounted for in revealed and stated values: estimating indirect effects implies double counting of benefits. But if policy makers fear that caregivers face choice without complete information or experience, indirect effects might be understated. Then it becomes constructive to devote resources to explore the importance of these indirect effects. (JEL D1, Q2) I. INTRODUCTION Intuition and evidence say that children deserve special attention in environmental policy debates. Science suggests that children can face disproportionately greater risk from certain environmental hazards because they are kids--smaller bodies, faster metabolisms, shorter attentions spans, less knowledge, and fewer resources. Even though the typical American child is healthier and safer than ever before, these lopsided risks can arise from basic differences in the physiology and activities of children and adults (see Thompson [2000]). A child's digestive, nerve, and immune systems are more susceptible to pollutants and other environmental hazards. Children breathe, eat, and drink more for their weight, and they spend more time outside, potentially exposing them to greater amounts of pollution for their weight than adults encounter (see, for instance, Landrigan and Carlson [1995], Landrigan et al. [1998], Wargo [1996]). Children are also less able to recognize and to protect themselves from these hazards. A g ood overview of the economic issues behind children is found in the Council of Economic Advisers' (1997) report, which stresses the importance of the first three years in the development of a child, and the corresponding costs of neglect. Parents and politicians agree: children deserve extra attention in rule making. The Clinton administration codified its concern in Executive Order (EO) 13045, "Protection of Children from Environmental Health Risks and Safety Risks," in 1997 (62 Fed. Reg. 19883-88, Apr. 23,1997). The EO instructs each federal agency to ensure that "its policies, programs, activities, and standards address disproportionate risks to children that result from environmental health risks"(19883). (1) At the same time, the U.S. Environmental Protection Agency (EPA) established its new Office of Children's Health Protection, or OCHP. The OCHP mission is to "make the protection of children's health a fundamental goal of public health and environmental protection in the United States." Both the children's EO and OCHP make explicit the principle that children can be at greater risk and that existing environmental regulations might not adequately protect children to the degree society desires. But because many EPA standards and regulations require benefit-cost analysis, the agency must meet the challenge of ensuring that the benefits of protecting children are adequately represented in economic analyses. Benefits assessment, as mandated by several other executive orders, requires policy makers to confront the fact that resources used for one action cannot be used for another. …