Cost–benefit evaluations of landmine clearance are contradictory. estimates that expenditure to remove landmines from Cambodia would produce benefits—in the form of saved lives, reduced injuries and medical costs, and greater farm output—that are worth just 2% of the costs. In Mozambique, the benefits would be worth only 10% of the costs similarly, suggests that landmines are not serious impediments to economic development in Bosnia and Herzegovina, and argues that general promotion of demining as a development action is unwarranted. An exception to these negative results is the study by of mine clearance in Afghanistan in which a positive net present value is obtained. However, even in that study the value of lives saved and disabilities avoided is only 35% of the total annual benefit of landmine clearance, with more benefit from saving dairy cattle.
As noted by, the study by discounts the benefits of mine clearance, but not the costs, even though the clearance program is spread over 25 years. While discounting costs substantially reduces the size of the negative NPV, the estimated benefits are still only 5% of costs. Paterson also notes that the study by Harris, and by implication the other studies cited above, fail to note that landmine programs involve targeted clearance operations rather than an “average” clearance task so that mine fields with the greatest benefits are likely to be cleared first. For example, Paterson suggests that in Cambodia the clearance of landmines that prevent the use of existing infrastructure or allow new development projects such as access roads, water systems, and irrigation works are likely to yield significant economic returns. As a result, the true economic benefits of real landmine programs are seriously underestimated. A recent cost–benefit study undertaken by shows positive benefit–cost ratios for clearing irrigation systems, water supplies, roads and bridges, school premises, health stations, and historical sites in Cambodia, while costs do not generally cover benefits for the clearance of agricultural lands. Applying these results to the overall Cambodian clearance program in 2004 Gildestad finds that benefits were 38% higher than costs.
THE CONCEPT AND ITS POLICY:
The value of statistical life (VSL) or the hedonic value of life is the trade-off between money and very small risk of death. This measure is the most prevalent benefit assessment approach used by Government agencies when valuing changes in risk. In the case of labor market, it is the wage-fatality trade-off revealed by workers‟ decision about how much extra pay or wage compensation the workers require for accepting jobs that pose additional risks.1 The VSL concept is based on the standard willingness to pay (WTP) principles from the public finance literature. While many non-economists continue to attack the entire concept of monetizing risks to life, these implicit trade-offs are reflective of how people themselves value the risks and respect consumer sovereignty in much the same way as do prices in other economic markets (Viscusi, 2008). Before conceptualizing the value of life, it is useful to distinguish this optimal deterrence amount from the amount that is optimal from the insurance standpoint.
HETEROGENEITY OF VSL :
This issue is illustrated in figure 1. Suppose that some worker groups, black or SC/ST community, etc.) faces the lower and flatter wage offer curve. Worker chooses risk for which his constant expected utility locus EU 3 is tangent to the market offer curve. This worker will have a lower VSL than the VSL of worker who faces the same risk but has different market opportunities. Hersch and Viscusi (2009) used fatality risks based on industry, immigrant status and age and found that Mexican workers face grater risk than native US workers and receive less risk compensation.