Migrant workers and the VOSL Consider the following hypothetical scenario: A proposed publicly-funded mining project in northern Ontario is turned down by the provincial government on the basis of its having a benefit-cost ratio that is slightly less than one. The project would make significant accounting profits, but the work involved is extremely dangerous. When the risk of worker death is taken into account, and valued using Canada’s recommended value of a statistical life, the costs outweigh the benefits. The company that would have run the project makes the following objection: “We agree that, using the Canadian government’s recommended value of a statistical life to value expected worker deaths, the benefit cost ratio is less than one. This value was given as $6.5 million in 2009, which adjusted for Canadian CPI inflation is about $8.9 million in 2023. However, this project is only expected to employ Canadians in administrative positions. All of the workers running the risk of death will be contract workers from South Korea who will live in Canada only for the duration of the project. In 2015, a peer-reviewed article using a willingness-to-pay approach found that the value of a statistical life in South Korea was 796 million won. Using OECD data to adjust for South Korean consumer inflation, this is equal to about 928 million won in 2023, or about $950,000 in 2023 Canadian dollars. Using this as the value of a statistical life results in a benefit-cost ratio for our project that is significantly greater than one, and in our project being preferred to all other alternatives when an incremental analysis is performed using best practices. We therefore urge the Ontario government to reconsider their decision and approve our project.” do you agree with the company’s objection? Why or why not? Briefly explain your reasoning.
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Migrant workers and the VOSL Consider the following hypothetical scenario: A proposed publicly-funded mining project in northern Ontario is turned down by the provincial government on the basis of its having a benefit-cost ratio that is slightly less than one. The project would make significant accounting profits, but the work involved is extremely dangerous. When the risk of worker death is taken into account, and valued using Canada’s recommended value of a statistical life, the costs outweigh the benefits. The company that would have run the project makes the following objection: “We agree that, using the Canadian government’s recommended value of a statistical life to value expected worker deaths, the benefit cost ratio is less than one. This value was given as $6.5 million in 2009, which adjusted for Canadian
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