Establishment of risk acceptance criteria using Life Quality Index: Application to the Indian context

The formulation of risk acceptance criteria may be coupled gainfully with a prediction of the of investment required to comply with it, an exercise which can benefit from the application of socioeconomic indicators. The Life Quality Index (LQI) is one such indicator which amalgamates human mortality and wealth creation and places an implicit economic value on reduction of life risk. While there have been a number of studies to demonstrate the application of LQI pertaining to various technological systems, the present work extends it to estimate the sectoral level investment needed to reduce public risks to within the As Low As Reasonably Predictable region for the chemical industry, with specific illustration of the methodology for India. The potential reduction in public individual risk is computed as a function of percentage increase in safety investment expressed as a fraction of the industry's contribution to the nation's GDP. In addition, using a new, more accurate expression, estimates of a related parameter, the implied cost of averting a fatality (ICAF), are obtained for a number of developed economies and India. The ICAF estimates show reasonable agreement with the value of statistical life (VSL), a parameter which is integral to cost-benefit analysis of safety and environmental regulations.