20 Accounting for Health Impacts of Climate Change Defensive Expenditure Methodology The defensive expenditure methodology assesses the cost of undertaking activities aimed at offsetting changes in environmental quality. There are three steps involved. Step 1 Since the expected change in environmental quality is assumed to impact people’s behavior, the first step is to identify the population that may be exposed to the expected change in environmental quality. Step 2 Through surveys, identify the actions and activities that individuals undertake to avoid exposure to degraded environmental quality. Step 3 Measure the cost to individuals of undertaking these actions or activities. The strengths of the defensive expenditure methodology are (i) (ii) the methodology is simple to implement and require minimal degree of technical or economic expertise; and since it is based on actual behavior undertaken by individuals, it may have more credibility during consultations with stakeholders. However, a key limitation of this methodology is that even if individuals are willing to pay to protect themselves against exposure to degraded environmental quality, the estimated expenditure does not provide a true measure of the benefits of the protection undertaken or of the true cost of the degraded environmental quality. In other words, costs are normally not a measure of the benefits. However, in appropriate circumstances, it may be said that the estimated expenditure provides a lower estimate of the true economic cost of the degraded environmental quality (and therefore of the benefit of the defensive activities). Cost-of-Illness Methodology The cost-of-illness methodology simply relies on estimating expenditure associated with treating the illness (Figure 10). The cost-of-illness methodology is relatively simple to implement. It simply estimates the direct and indirect costs associated with treating or experiencing a particular illness. There are essentially three steps involved. Figure 10 Defensive Expenditure and Cost-of-Illness Methodologies Pollution Exposure Defensive Expenditure Methodology Source: Author. Illness Cost-of-Illness Methodology