tobacco and its impact

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FROM THE 9TH WORLD CONFERENCE ON TOBACCO AND HEALT H

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The economic burden of the global trade intobacco1


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Table I Total world co uwnprioa of r$esw(zJtowfinds of tons - dry tesegbs)Brut 1975 1915 1995Devosepiccs 2300 3747 10 0 0=Wd 2400 23W 23004700 6700 T3 00Source: FAOTable 2 Morbidity and morsaiiry front 1000 rows ofadded tobacco conswteptiortsTadaaw-tedjcsd Amnmd addedaseeme Armed new aster sWkCJmcer 230 20 0C.tdio.Mcutar 460 33 0COPD rovascuiar 19 4 M 507 0Twel 496 63 0* Esdmated & = US dam ; COPP - chroolc obiuuc>iwpulmouery dime

The global economic burden of tobaccoGtOIIAL CONSL)b1PTIOWTurning to the first section, table 1 givesestimates from the Food and AgricultureOrganisation (FAQ) of the global consumptionof tobacco for 1975 to 95. Globally, con-sumprion is expected to have increased by over50% from 1975 to 95 . All of this ine - secomes in developing countries where con-sumption is to double. In developed countriesconsumption will actually have fallen frCrn1975 to 95 .Mortality from global tobacco consumptionThe tobacco traded in the global market addsa net loss to world welfare . There is, of course,some short-term consumer satisfaction andadded producer profits, but these benefits aredwarfed by the cost of morbidity and mortalitycaused by tobacco useGlobally, tobacco caused 3 million deaths inthe last year and is expected to cause 10 milliondeaths a year by 2025- OA in tight deaths inLess developed countries is caused by tobacco,one in four in developed countries, and one insix for the world as a whole .Morbidity and mortality from 1600 added ramsof consumptionTo get some idea of the economic impact ofthese deaths and the associated illness, weestimated the global effect of adding 1000 tonsof tobacco eonatrtnption. Ii, a backgroundpaper pttptred for the World Bank - to helpexamine the wisdom of our policy of notlending for tobacco - we estimated the pro-ducer and consumer benefits from tobaccoconsumption and compared them to theeconomic costs.

15 Feb '99 9:55P03C"K & dans4 of 1,000 Aodea Item ofTobacco Caneump6 sn (Fi . '1950 Ue$ )

A0dYafua forConlummsr$ and'raeeiaata02.800.000)

N e t L .oss iS $ 2 7 , 2 0 0 e 0 0 0 a DeamManuel COEsli?A,f100.000)

Figu.We have estimated, based-ion. US SurgeonGeneral data, that one ton dPtobascca ton-

Burned causes an average of about 0 .65 deaths,with an average lag of 25 to 30 years* . Table 2gives a breakdown of the number of deaths andnew cases of illness from 1000 tons of addedtobacco consumption These are prematuredeaths and new cases distributed over a 3o.year period into the future .Costs and benefits of added consumption of1000 tonsWith this breakdown by types of disease wecan now look at the cost of illness from the1000 tons of tobacco consumption and corn-pare this with the. benefits- of consumption(table 3).Value for consumers and produced Consumersderive immediate value, piasute, from theirconsumption of tobacco . Producers also derivebenefit, their profits, from the market fortobacco. There are economic ussthods forcalculating the benefits of the.consumption toproducers and consumers . These involve anapplication of the estimated deed andsupply responses characteristic of the marketfor tobstceo. Using 1990 prices, we estimatedthat the added value for consumers andproducers is US $2.6 million.Direct costs The medical burden of the con-sumption is obvious. Cangtr, ttrdiovascular,cerebrovaseular, and chronic obstriutive pul-monary diseases are expensive to treat. Theestimated direct costs of trea=t are US $5 .6million-

New estimates using recent data (Pets R, Lopes AsBonham J, Thins M Heath C Jr AUre.4i'7 fromsmoki in developed coumtriu 1950-2000. Oxford!Oxford University Press, 1994) iiriggest that thenumber of deaths from one con of sebscw consumptionMAY be closer to 1 .3 . If so, this would appromemetaalydouble the estimated net econonmic costs A f tobaccooonsurnprion .

Table 3 Costs and bmiefiu-rom 1000 ton inersate in tobacco consempnoe (it 1990 million VS 1) .Efset corer Net beiaelluConsumer & producer benefn 2.6 2.6Pleeatwe Bath 13.2 -132Indian, morbidity cools 11 .0 -11 .0DiteS morbidity costs 3 .6To,*l 2.6 Z9ib

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Table 4 Selected cancer Types a, a percona 'e of alleaaur by replan (rerinnal rotab are 100 %)

Sub-Sebarm AfroMiddle BastIndiaOther AsiaSoutl, AmefloDChinaFormer USSR and Easter nEuropeD nop c eCaaotnietWorld

5 .37 .219,59 .21 . 1jt4 .23 .36 .9

S _$15.17 .213 .38. 712 .026 .522.416 . 1

Table S Rare of growth of raboeeo o,uumpfia n(P,--r per year)Rrrion 1975-85 1985-90 1995-2000Developin4 4.8 3 4 2.7Dcvelopu0 -0.4 -02 -010world 2 .4 21 1 . 0Source: FAO projectionsIndireer costs In addition there are the so-called "indirect costs" of the economic valueof the years of life lost to morbidity (US 311million) and premature mortality (US 313 .2million) .Summing all of the benefits and costs, the 1000added tons of consumption produces a globalnet loss of 827 million (see figure). Obviously,from a global point of view. the production andconsumption of tobacco is not a very gooddeal .Global nor eeosromic lost from tobaccoronstunprianIf we extrapolate the estimated net loss from1000 tons to the 7 million tons produced in theworld in 1940, we can get a very rough estimateof the global economic loss from tobaccoUsing this approach, the world tobacco marketproduces an annual global loss of $200 billionAbout one third of this loss occurs in develop-ing countries .Socioeconomic change I rbanisation and accessto mass media and education, at least initially,have acted to increase smoking in manycountries. Increased income is, however, oneof the most important factors . We have esti-mated that a 10 % increase in per capita income> be expected to increase tobacco consump-tion by 7 % in middle-income countries,and by more than 139/, In low-incomecountries.

Developing countriesI will now consider the situation in developingcountries .CURPWIT UTVASIONUntil now, she developing world has felt onlya small part of this economic loss, but thefuture could be very different- Lung cancer,although only one of the several health effectsof tobacco, it a good Indicator of the, health,burden from tobacco use, at least as far assmoking is concerned. This is because, in theabsence of smoking, lung cancer is actually aminor and relatively rare disea_ .

Parewdd minPopulaeion po eh+Agaa at popuInee+Soeio.u.+oouc ebaop :ncom44Urb.oi.arioe. ++ommuniatlaa, education ~ 'Pice at tobawo dav,,ds on.poliqDqa and shits :Mvice lama +++Cat no Policy)1t.elWiaform$tion a-p*wkoo policyRe"Istiaa. 0Qnwdepends oa policy+, small effect: ++, Jute .Seet; +++. vary large d1ece

Table 4 shows that in comparison with therest of the world, lung cancer in the developingworld accounts for a much smaller percentageof total cancer in men: The relative percentagefor women is eve- recalls,. If world tobaccoCompanies have their iaay, however, thispicture will change In the future . In fact,because current lung cancer is based on pastconsumption with a . long lag, the recent 'increase in tobacco consumption that hasalready occurred in part of the developingworld will stuns an inevitabk increase in illnessin the future .

PROJEMD GROVrM LtThe projected growth irate of tobacco con .surnption in develop tnoountrics is expectedto be about 3 % for 1995-2000, barring ne wnational policies that would thwart the currenttrend. This comllpares. :with no growth ordecline for The developed world (table 5) .

COISSUNirrio JIt is useful to examine the factors behind theexpected growth betauie be investigation mayhave some policy implications . The majorfactors that will affect :change in tobace6 :consumption in developing eotrntnes are indi-cated in the chart below .Da,,sographie change The first two factors arethe natural increase iajopulation and theaging of the population. As children moVtupward through the pppti7ation pyramid toreach adolescence and- yjDturyg adulthood - theage at which many people Karr smoking - theconsumption of tobacco.will inarcase .Socioeconomic changs t3sbk2uation and toess to mass media and bdutation, atinitially, have acted to; ire smoking itmany countries- IncreLsed .lacome is, howevaone of the most im lort~t SacWrs. Weestimated that a 10 Y. crease in Porincome can be expected to increase toconsumption by 7% . in middle-facountries, and by more' dean 13 % inincome countries .

These two factors - dennpgssphic and i'economic chaise - ase . l i A C S O r a Mat go-1menta do not control. isit effects are il~exorable. There are, havdevex, factors $90cs>ll.change over which goverrilents canconsiderable policy cant OC `These include '

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Table 7 Car per year of 6/e gdned from dtfwenrA ral th ierervsnt ms ( in a eoanrry te ie4 GDP- U S$2000 )tnrruouioe 0St -- yeor of We geiedpr4weariftAot l -sawru u g 20-40Mssd bamiaw sea 15-10Ca.toal oars screening 10o-S00Trevol"MOral Coca 1000

I.-I caeca 18000Retail tobacco prices Cigarette prices, greatlyaffected by excise taxes, have strong effects onthe number of new starters and lesser effects(but positive) on smoking cessation. Someestimates suggest that a 10 %increase incigarette prices reduces new stt3 by almost15 %. The price responsiveness of teenagers isexpected to be even greater in the lowestincome countries .Factors a ecring dsmard shift The most im-portant actor affecting consumption is ad-vertising and promotional schemes of tobaccocompanies. Marlboro cowboys, cool Camels,and other advertising gambits greatly .affect therate of smoking by young people. Experiencearound the world, however, has shown thatgovernment health information campaigns,regulation, and other government policies canhelp to offset efforts by tobacco companies toexpand tobacco markets.To avoid the high economic cost of increasedtobacco consumption, developing countriesneed to act now to implement policies to offsetthe effects of socioeconomic change and to-bacco company promotion on future tobaccouse.

The cost-effectiveness of tobacco policyThe World Health Organisation has developeda set of booklets that outline effective anti-tobacco policies in great derail I would like togive you the results of an examination we didof the potential cost-effectiveness of similarprogrammes in comparison to other healthinterventions .Table 7 gives the number of years of lifegained from different health interventions thatcompete for the scarce resources available to aMinistry of Health. An.anu. smoking carnpaigncosts between U53 20 and 40 per year of lifegained. This compares to USS 18000 per yearof life gained from lung cancer reatnient .In general, anti-stroking campaigns areamong the most cost-effective measures toimprove health and are surpassed only bychildhood immunisations- By spending less ontreatnccnt and more on anti-smoking efforts,many more years of life can be saved with theavailable resources .WO1,D BANK POLIC YThe World Bank has become so impressedwith these facts-that is, the global economicburden of tobacco and the cost-egecrnv.n.cs ofant-tobacco policy -that three years no ourboard of directors confirmed a policy (see box)

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World Bank policy oa~ .trbaceoIn 1992, in recognidtii Z ' :'idtC adverseeffects of tobacco consntdn,onhealth,the World Bank a nti i a formalpolicy on tobacco. Tlit'oiicp containsfive main points.is The World B2n 9;"' *ft in thehealth sector - incln ae,~or work,policy dialogue, atsdg - discour-age the use of tobacco Ducts

The World Bank . not leaddirectly for, invest il' guaranteeinvestments or loans for;tobacco pro-duction, processing, or marketing. How-ever, in the few countries t are heavilydependent on tobacco as. a source ofincome and of foreign exchange earnings(for example, those vflic=e tobaccoaccounts for more than 'I0, percent ofexports) and especially as a source ofincome for poor farmet,s and farm-workers, the World Bank; treats thesubject within the conre%t.of.respondingmost effectively to these 'countries' de-velopgaeat requirements : . The WorldBank seeks to help thesq countries di-versify away from tobacco- .,is To the extent . prncayable, theWorld Bank does not lend-indirectly fortobacco production activities, althoughsome indirect support oe the, tobaccoeconorz y may occur as an .- .inseparablepart of a protect that has-a b>!o$er set ofobjectives and outcomes (for example,rural roads) . Unmanufactured andannufacturedtobacco, tobacco-processing machineryand equipment, and relarcci services areincluded on the negative list of importsin loan agreements and so cannot beincluded among imports financed underloans. '

Tobacco and tobacco-related pro-ducer or consumer imports may beexempt from borrowers' agreements withthe Bank to liberaIi;c trade and reducetariff levels .Source ; World Bank . World dewl'dpman report1993 : Inveuirrr in heaith. Odsrd `O,fordUniversity press, 1993 ; 59

which had become de faces over the previous10 years:Bank operations include sari-tobacco activitiesin sector work, policy dislogue,- -i ruf LeadingOperationsTbc Bank does nor lend for tobacco production,processing, imports, or marketiag ; ;-srhgdcr fordomestic consumption or for export. '

ConclusionThis, then, is the simple m . Tobaccoconsumption provides a net .+scciiiomie loss,and anti-tobacco policies art a.cdst-effeedveWAY to save IIve7 ana benefit th evonorny . Ihope you are convinced and will, convey thismessage to your ministers of fnsa ice.

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tobacco and its impact

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