Regulatory Proposal for Reducing Fire Risks from Cigarettes

Benefits of a Cigarette Ignition Propensity Standard - Chapter 5

5.1 Introduction

Cigarette-ignited fires cause deaths, injuries, and property damage in Canada each year.  Health Canada's proposed standard for cigarette ignition propensity is intended to reduce the number of fires ignited by cigarettes, and thus the losses associated with such fires.

This chapter estimates the benefits to society of Health Canada's proposed cigarette ignition propensity regulations.  It first uses national and provincial fire loss data to characterise the damages that would occur annually in the absence of a reduced ignition propensity (RIP) standard.  It then estimates the reduction in deaths, injuries and property damages that would result from adoption of the standard, and calculates the economic value of the projected reduction in fire losses.  The sum of these values represents the estimated benefits of the RIP standard.

5.2 Fire Losses In The Absence Of An Ignition Propensity Standard

The analysis of conditions that would prevail in the absence of a RIP standard examines recent data on the incidence of fires caused by smoker's article.³⁶ and the losses attributable to such fires, with a focus on the following:

• fatalities;
• injuries; and
• property damage.

The analysis draws on information from a range of sources including national fire loss statistics maintained by the Council of Canadian Fire Marshals and Fire Commissioners (CCFM&FC) and more detailed data maintained by the provinces of Alberta and Ontario.  The following discussion describes these data sources and their use in developing a baseline from which to estimate the benefits of the proposed regulations.

5.2.1 National Fire and Fire Loss Data: Smoker's Article Fires

CCFM&FC annually publishes reports providing national data on fire losses by ignition source and has made its annual reports from 1992 through 2000 available on the Internet.³⁷ These reports summarise data obtained from the offices of provincial and territorial fire marshals and fire commissioners.  Due to inconsistencies among provinces in the classification of ignition sources, the CCFM&FC data do not separately report fire losses attributable solely to lit cigarettes.  They do, however, note fire losses resulting from fires started by "smoker's articles," including cigarettes, pipe contents, cigars, ashtray contents, and matches and lighters when used in conjunction with smoking.^38,39 These data provide a foundation for characterising the incidence of cigarette-related fires and fire losses in the absence of a RIP standard.

Exhibit 5-1 summarises the information the CCFM&FC data provide on fires caused by smoker's articles and associated fatalities, injuries, and property damages.  As the exhibit indicates, smoker's articles caused an average of more than 3,200 fires per year from 1992 through 2000, and accounted for an annual average of 75 fatalities, 349 injuries, and $44.7 million (2002 $CAD) in property damage nationally during this period.⁴⁰

Exhibit 5-1 - Fires and Fire Losses Caused by Smoker's Articles in Canada, 1992-2000

Fire Loss Measure	Minimum Annual Value	Maximum Annual Value	Annual Mean
Number of Fires	2,532	3,929	3,216
Number of Fatalities	44	106	75
Number of Injuries	261	435	349
Property Damage (2002 $CAD)	$35.0 million	$59.5 million	$44.7 million

Source:
Analysis of data obtained from the Council of Canadian Fire Marshals and Fire Commissioners.

To determine whether these recent historical averages are reasonably representative of likely future conditions in the absence of a RIP standard, the analysis examined yearly trends in the incidence of fires and fire losses associated with smoker's articles.  Exhibits 5-2 through 5-5 present the results of this analysis, illustrating both the annual variation in the data and linear trend lines fitted to each time series.  In three instances - the number of smoker's article fires reported in Canada, and fatalities and property damage attributed to such fires - the data suggest an upward trend.  In contrast, the data on injuries associated with smoker's article fires suggest a downward trend.  In each case, however, the R² values for the trend lines fitted to each data set are relatively low, indicating that the observed variation in fire incidence and fire losses is not strongly correlated with time.⁴¹ Moreover, the analysis of trends is based on a relatively small number of observations in each data set; the expansion of the time series as observations for 2001 and on become available could significantly alter conclusions regarding the direction of apparent trends.  In light of these considerations, the analysis employs the mean values reported in Exhibit 5-1, rather than trend analysis, to characterise the likely incidence of smoker's article fires and fire losses in the absence of a RIP standard.

Exhibit 5-2 - Fires Caused By Smoker's Articles in Canada, 1992-2000

Source: Analysis of data provided by the Council of Canadian Fire Marshals and Fire Commissioners

Exhibit 5-3 - Fatalities Caused By Smoker's Article Fires in Canada, 1992-2000

Source: Analysis of data provided by the Council of Canadian Fire Marshals and Fire Commissioners

Exhibit 5-4 - Injuries Caused by Smoker's Article Fires in Canada, 1992-2000

Source: Analysis of data provided by the Council of Canadian Fire Marshals and Fire Commissioners

Exhibit 5-5 - Property Damage Caused by Smoker's Article Fires in Canada, 1992-2000

Source: Analysis of data provided by the Council of Canadian Fire Marshals and Fire Commissioners

5.2.2 Provincial Fire and Fire Loss Data: Fires Caused by Cigarettes

As previously noted, CCFM&FC's national data set reports fires and fire losses attributable to smoker's articles, including sources of ignition other than cigarettes.  To adjust the national data to more accurately characterise fire losses attributable solely to cigarettes, the analysis relies on data from the Alberta Fire Commissioner's Office, which tracks cigarettes as a separate ignition category.⁴² The Alberta data provide the best available basis for estimating the percentage of smoker's article fires that are ignited by cigarettes, and the percentage of losses associated with such fires that can be linked to cigarettes.  Exhibit 5-6 presents this information, based on analysis of the most recent ten years of Alberta fire data (1992 through 2001).

Exhibit 5-6 - Percentage of Smoker's Article Fires and Fire Losses Caused by Cigarettes: Alberta, 1992-2001

Fire Loss Measure	Minimum Annual Value	Maximum Annual Value	Annual Mean
Number of Fires	54.2%	91.7%	>75.4%
Number of Fatalities	37.5%	100.0%	82.1%
Number of Injuries	54.7%	97.5%	75.6%
Property Damage (2002 $CAD)	49.6%	89.7%	73.2%

Source:
Analysis of data obtained from Mahendra Wijayasinghe, Assistant Fire Commissioner, Alberta Fire Commissioner's Office.

In addition to calculating the percentages cited above, the analysis examined trends in the Alberta data.  Exhibits 5-7 through 5-10 present the results of this analysis, reporting R² values for log-linear trend lines fitted to each data set.⁴³ For three of the four variables examined  (fatalities, injuries, and property damage), no strong trends are apparent; thus, subsequent analysis relies on the arithmetic means presented above to characterise fires and fire losses attributable to cigarettes.

Exhibit 5-7 - Fires Ignited by Cigarettes as a Percentage of Fires Ignited by Smoker's Articles: Alberta, 1992-2001

Source: Analysis of data provided by Mahendra Wijayasinghe, Assistant Fire Commissioner, Alberta Fire Commissioner's Office, written communication, July 31, 2003; August 13, 2003

Exhibit 5-8 - Fatalities Caused by Cigarettes as a Percentage of Fires Ignited by Smoker's Articles: Alberta, 1992-2001

Source: Analysis of data provided by Mahendra Wijayasinghe, Assistant Fire Commissioner, Alberta Fire Commissioner's Office, written communication, July 31, 2003; August 13, 2003

Exhibit 5-9 - Injuries Caused by Cigarettes as a Percentage of Fires Ignited by Smoker's Articles: Alberta, 1992-2001

Source: Analysis of data provided by Mahendra Wijayasinghe, Assistant Fire Commissioner, Alberta Fire Commissioner's Office, written communication, July 31, 2003; August 13, 2003

Exhibit 5-10 - Property Damaged Caused by Cigarettes as a Percentage of Fires Ignited by Smoker's Articles: Alberta, 1992-2001

Source: Analysis of data provided by Mahendra Wijayasinghe, Assistant Fire Commissioner, Alberta Fire Commissioner's Office, written communication, July 31, 2003; August 13, 2003

5.2.3 Baseline Fire Loss Estimates - Fires Caused by Manufactured Cigarettes

The assessment of Alberta fire loss data described above provides scaling factors that can be applied to the CCFM&FC data to estimate national fire losses that would be attributable to cigarettes in the absence of a RIP standard.  According to 2002 Canadian sales data, however, 14 percent of all cigarettes sold in Canada are hand-rolled fine cut cigarettes, tobacco sticks, or cigarettes made from tobacco and tubes.⁴⁴ Since the currently proposed ignition propensity regulations would apply only to manufactured cigarettes, it is appropriate to exclude fire losses that may be attributable to other tobacco products from the estimate of baseline fire loss damages.  Thus, the analysis incorporates an additional scaling factor to reflect the share of the cigarette market accounted for by manufactured cigarettes.  Exhibit 5-11 presents these scaling factors, the values to which they are applied, and the baseline estimates of fires and fire losses attributable to manufactured cigarettes.  As the exhibit shows, the analysis suggests that manufactured cigarettes on average would ignite 2,085 fires in Canada each year.  It further suggests that, on an annual basis, these fires would account for an average of 53 deaths, 227 injuries, and $28.1 million (2002 $CAD) in property damage throughout Canada.

Exhibit 5-11 - Baseline Estimate of Fire Incidence and Fire Losses Attributable yo Manufactured Cigarettes

Fire Loss Measure	Fires Caused by Smoker's Articles	Smoker's Article Fires Caused by Cigarettes1	Manufactured Cigarette Share2	Baseline Fires and Fire Losses
Fires Per Year	3,216	75.4%	86%	2,085
Fatalities Per Year	75	82.1%	86%	53
Injuries Per Year	349	75.6%	86%	227
Property Damage Per Year (2002 $CAD)	44.7 million	73.2%	86%	$28.1 million

Notes:
¹ Based on Alberta fire loss data (see Exhibit 5-6).
² Based on analysis of 2002 sales data.

5.2.4 Characterisation of Injuries Associated with Cigarette-Related Fires

National data on the nature and severity of injuries associated with cigarette-related fires are limited.  The CCFM&FC data indicate that fire-fighters sustain 22.35 percent and civilians 77.65 percent of the injuries caused by smoker's article fires.  Applying these percentages to the baseline estimate derived above suggests an annual average of 51 injuries to fire-fighters and 176 injuries to civilians as a result of cigarette-related fires.  Beyond this, however, the CCFM&FC data provide no detailed information on fire injuries.

To supplement the national data, the analysis relies on injury data from the Ontario Office of the Fire Marshal, which maintains information on the nature and severity of the injuries that civilians sustain as a result of fires ignited by lit smoker's materials.⁴⁵.⁴⁶  This information is more detailed than that maintained by other provinces, and reflects the assessment of fire-fighters on the scene concerning the nature and severity of injuries civilians have suffered.  Under Ontario's reporting procedures, injuries are classified as follows:

• Asphyxia/Respiratory Condition
• Bone Injury/Fracture
• Burns/Scalds
• Eye Injury
• Head/Neck/Spine Injury
• Heart Attack/Stroke
• Incision/Laceration/Puncture
• Minor Cuts/Bruises
• Muscle/Ligament/Joint Injury
• Traumatic Shock
• Unknown

Within these categories, the severity of injury is identified as either minor, meaning no loss of work or hospitalisation is required, or serious, meaning loss of work or hospitalisation is required.⁴⁷

Exhibit 5-12 - Reported Injuries by Type Due to Lit Smoker's Material Fires in Ontario, 1995-2001

Enlarge image

Source: Office of the Fire Marshal, Ontario, "Ontario Civilian Fire Injuries: age, injury type and severity" April 23, 2003; received from Alison Wilson, Co-ordinator, Data Services, OFM, August 8, 2003

Exhibit 5-12 illustrates the distribution of injuries by severity and type, based on an assessment of the Ontario injury data for 1995 through 2001.⁴⁸ As the exhibit shows, the most common injuries caused by lit smoker's material fires in Ontario are asphyxia or respiratory conditions (45.3 percent) and burns or scalds (25.2 percent).  Slightly less than 40 percent of the injuries reported are identified as serious.  The analysis applies this information to characterise the likely distribution of civilian injuries attributable to cigarette-related fires.  Exhibit 5-13 presents the results for the baseline assessment, focusing on three broad categories of injury: asphyxia/respiratory conditions; burns/scalds; and other.

Exhibit 5-13 - Distribution of Civilian Injuries by Nature and Severity: Baseline Estimate

Nature and Severity of Injury a	Number of Injuries By Type, Ontario (1995-2001) b	Percent of Total Injuries	Baseline Injuries Per Year, Canada c
Asphyxia/Respiratory Condition/Minor	170	27.6%	49
Asphyxia/Respiratory Condition/Serious	109	17.7%	31
Burns or Scalds/Minor	85	13.8%	24
Burns or Scalds/Serious	70	11.4%	20
Other/Minor	124	20.1%	35
Other/Serious	58	9.4%	17
Total	616	100.0%	176

Notes:
^a "Other" injuries include injuries identified as "unknown."  To characterise the overall distribution of injuries, injuries of unknown severity are allocated to the minor or serious category in proportion to the reported severity of other injuries of the same type.
^b Based on fires caused by lit smokers' materials.
^c Data are not available on the types of injuries caused by manufactured cigarettes.  Therefore, the analysis relies upon the distribution of injury types from lit smoker's material fires in Ontario to characterise the distribution of civilian injuries caused by cigarette-ignited fires in Canada (as estimated in section 5.2.4).  Values are rounded to eliminate fractions, and to ensure that the sum of injuries by type and severity equals total civilian injuries. Source: 
Analysis of injury data from the Office of the Fire Marshal, Ontario.

5.3 Estimated Effect of the Proposed Ignition Propensity Standard on Fire Losses

As the performance standard for cigarettes sold in Canada, Health Canada proposes to require a 75 percent cigarette extinction rate as measured by ASTM Method E2187-02b: Standard Test Method for Measuring the Ignition Strength of Cigarettes (the filter paper method).⁴⁹ The effect of this standard on fire losses, however, depends upon the degree to which compliance with it corresponds to a reduction in cigarette fires.  The relationship between performance on the cigarette extinction test and the propensity of cigarettes to ignite fires in practice has been the subject of comment during the regulatory consultation process.  To test the sensitivity of the benefits assessment to this relationship, the analysis examines two scenarios. As described below, these scenarios provide a basis for estimating the potential effect of the proposed RIP standard on the fatalities, injuries, and property losses attributable to cigarette-related fires.

Scenario 1: 68 Percent Reduction

- The U.S. Technical Study Group on Cigarette and Little Cigar Fire Safety (TSG) published a report in 1987 that found that ignition results in bench-scale mock-up tests, which involve placing a lit cigarette on varying fabric and foam substrates, correlate strongly with ignition results using actual furniture.⁵⁰ Furthermore, experiments by the U.S. National Institute of Standards and Technology (NIST) have indicated a relationship between the number of filter papers on which a cigarette can continue to burn during the cigarette extinction test and the ignition propensity of cigarettes as established by bench-scale testing in the 1987 TSG study.  The cigarette extinction test and the TSG bench-scale experiments correlate over a wide range of ignition probabilities.⁵¹

On average, cigarettes ignited fires 24 percent of the time under full-scale test conditions, and 19 percent of the time under bench-scale test conditions (see Exhibit 5-14); thus, the bench-scale test appears to have underestimated ignition propensity by a factor of 1.26 (0.24 / 0.19 = 1.26).  Applying this factor to Health Canada's proposed test standard, which would permit a maximum failure rate of 25 percent, yields an estimated failure rate of 32 percent (1.26 * 0.25 = 0.32).  Thus, Scenario 1 assumes a 68 percent reduction in fires ignited by manufactured cigarettes, and a corresponding reduction in the associated fire losses.  This is considered the best estimate of fire and fire loss reduction as a result of the proposed regulations.

Scenario 2:  34 Percent Reduction

- By reducing Scenario 1 by 50 percent, Scenario 2 attempts to take into account the presence of confounding factors such as fires started in trash cans or on paper, as opposed to couches or beds, and the uncertain influence of air flows or crevices on ignition propensity.  It also recognises that the cigarette extinction method cannot make fine distinctions among cigarette ignition propensities, and thus a range of ignition propensity cigarettes may meet the 75 percent standard.⁵²  Consequently, Scenario 2 is a lower bound estimate.

Exhibit 5-14 - Technical Study Group Test Results

Cigarette	Full-Scale Test Ignition Rate	Bench-Scale Test Ignition Rate
A	0.73	0.74
B	0.06	0.00
C	0.23	0.13
D	0.14	0.06
E	0.06	0.03
Average	0.24	0.19

Source:
Analysis of data provided in R.G. Gann et al., 1987, The Effect of Cigarette Characteristics on The Ignition of Soft Furnishings, Technical Study Group on Cigarette and Little Cigar Fire Safety, Center for Fire Research, National Bureau of Standards, 79.

Exhibit 5-15 summarises the estimated reduction in fires and fire losses under the two scenarios described above.  The analysis assumes that the reduction in fire losses in each case would be proportional to the reduction in fire incidence.  The results indicate that the proposed RIP standard would reduce the number of cigarette-ignited fires by 709 to 1,418 per year.  This reduction in fires would in turn reduce fatalities by 18 to 36 per year, civilian injuries by 60 to 120 per year, fire-fighter injuries by 17 to 35 per year, and property losses by $9.6 million to $19.1 million (2002 $CAD) per year.

Exhibit 5-15 - Estimated Annual Reduction in Fire Losses Due to the Rip Standard

Fire Loss Measure	Baseline Fire Losses	Reduction in Fires and Fire Losses
		Scenario 1	Scenario 2
Fires Per Year	2,085	1,418	709
Fatalities Per Year	53	36	18
Civilian Injuries Per Year	176	120	60
Fire-fighter Injuries Per Year	51	35	17
Property Damage Per Year (2002 $CAD)	$28.1 million	$19.1 million	$9.6 million

Exhibit 5-16 provides additional detail on the estimated reduction in civilian fire injuries under each loss reduction scenario.

Exhibit 5-16 - Estimated Annual Reduction in Civilian Fire Injuries

Loss Reduction Scenario	Anoxi.53		Burns		Other Injuries		Total Civilian Injuries
	Serious	Minor	Serious	Minor	Serious	Minor
Scenario 1	21	33	14	16	12	24	120
Scenario 2	11	17	7	8	5	12	60

Notes:
Values are rounded to eliminate fractions, and to ensure that the sum of injuries by type and severity equals total civilian injuries.

5.4 Valuing the Beneficial Impacts of the Standard

The next step in the benefits assessment is to estimate the economic value of potential reductions in fire losses.  In the case of property damage, no additional analysis is required, since the reduction in property damage is already expressed in economic terms.  In the case of fatalities and injuries, however, additional analysis is necessary.  In both instances, the analysis relies on benefit transfer techniques, rather than primary economic research, to value the regulation's beneficial impacts.  Additional information on the approach employed in each case is provided below.

5.4.1 Fatalities

The analysis estimates the economic benefit of a reduction in cigarette-fire fatalities using the "value of statistical life" (VSL) approach.  The VSL approach does not attempt to assign an economic value to any particular person's life.  Instead, it employs data on individual willingness to pay for small reductions in risk, and extrapolates from these data to determine society's cumulative willingness to pay for reductions in risk that, on a statistical basis, would be expected to result in the avoidance of a premature death.⁵⁴ The VSL approach allows analysts to estimate the economic value of health and safety initiatives that, on a statistical basis, are expected to save lives.

The VSL estimate employed in this analysis is $5.8 million (2002 $CAD).  This value is based on an extensive review of the literature and is consistent with that which Health Canada has recently employed in other benefits assessments.⁵⁵ Exhibit 5-17 applies this value to the reduction in cigarette-fire fatalities estimated under each of the scenarios described above.  As the exhibit shows, the estimated benefits range from $104.4 million to $208.8 million per year (2002 $CAD).

Exhibit 5-17 - Estimated Annual Benefits of a Reduction in Cigarette-fire Fatalities (2002 $CAD)

Loss Reduction Scenario	Estimated Annual Reduction In Cigarette-Fire Fatalities	Value of a Statistical Life	Annual Benefit Estimate
Scenario 1	36	$5.8 million	$208.8 million
Scenario 2	18	$5.8 million	$104.4 million

5.4.2 Injuries

In lieu of primary research, the preferred method for valuing a reduction in cigarette-fire injuries would be to transfer estimates from other studies that characterise individual willingness to pay to avoid such injuries.  This method is commonly known as the Willingness to Pay (WTP) approach.  A search of the literature, however, identified no such studies.  As an alternative, the analysis employs a "Health Care Cost" (HCC) approach to value estimated reductions in injuries due to the proposed RIP standard.  This approach is described in greater detail below.

Health Care Cost Approach

The health care cost approach used in this analysis includes the costs of emergency transportation and care, hospital stays, medication, and doctor's visits.  The HCC approach has two primary strengths.  Because it relies on actual market prices, it avoids the uncertainty inherent in hypothetical markets.  Also, for many health effects, health care cost data are regularly collected and easy to access.  The HCC approach also considers the full cost of treatment whereas the willingness to pay approach includes individual medical costs - which can be very different than the full cost of the treatment because of factors like health insurance.

However, in contrast to WTP, the HCC approach used in this analysis does not include an individual's willingness to pay to avoid a health effect, the cost of lost time (lost work time, sleep time, and leisure time) due to illness, the value of time spent and goods purchased to avoid infection or injury, and willingness to pay to avoid pain and suffering.⁵⁶ The HCC estimate can thus be considered a lower bound of the total value of health benefits arising from a cigarette ignition propensity standard.⁵⁷

The health care cost approach can be applied on an incidence or prevalence basis.   Prevalence-based studies assess the costs of all active cases in a given year, while incidence-based studies consider costs per new case diagnosed, including all costs incurred throughout the duration of the injury/illness.  The decision to use prevalence or incidence statistics depends on the goal of a particular analysis and the availability of data.  Because the proposed regulations will affect the incidence of future cigarette-fire related injuries (and will not affect the prevalence of injuries already incurred), an incidence-based approach is preferred.  In addition, data on cigarette-fire injuries are available on an incidence basis.  Therefore, the analysis of the benefits of the proposed regulations follows an incidence-based approach.

Health Care Cost Values

A search of the Canadian health care literature identified no incidence-based health care cost studies for the health effects likely to result from cigarette-ignited fires.  In lieu of Canadian data, the health care cost analysis is based on a 1993 study of the societal costs of cigarette fires in the United States (Miller, et al., 1993).⁵⁸  

The U.S. study estimates a cost per injury of $1,679 (2002 $CAD) for non-fatal injuries to fire-fighters.  In addition, it presents treatment cost data for several categories of injury to civilians: burns, including burns in conjunction with anoxia; anoxia only; and other injuries associated with cigarette fires.  Within each of these categories, the authors develop separate cost estimates for non-fatal injuries of different severity: those that require hospitalisation; those that require emergency room treatment, but no hospitalisation; and those that require other forms of treatment (e.g., treatment in a physician's office).⁵⁹  

The analysis employs the U.S. data to develop the cost of treatment estimates presented in Exhibit 5-18.⁶⁰    As the exhibit indicates, the cost of treating injuries that require hospitalisation is much higher than the cost of treating less severe injuries.  This is particularly true in the case of burns.

Exhibit 5-18 - Health Care Cost Values for Civilian Injuries (2002 $CAD)

Severity of Injury	Category of Injury
	Anoxia	Burns	Other
Serious - Hospitalisation	$7,777	$78,738	$21,963
Serious - No Hospitalisation	$1,072	$1,072	$791
Minor	$151	$151	$151

Source:
Analysis of Miller et al., 1993, "Estimating the Costs to Society of Cigarette Fire Injuries:  Final Report," presented in Appendix A, Societal Costs of Cigarette Fires, Report 6, U.S. Consumer Product Safety Commission.

Benefits of the Estimated Reduction in Injuries

As previously noted, the Ontario Office of the Fire Marshal defines serious injuries as those that result in hospital care (either emergency room care or hospitalisation) or loss of work.⁶¹ To apply the health care cost values presented above, it is necessary to estimate the share of serious injuries that result in hospitalisation.  An evaluation of data from the National Ambulatory Care Reporting System indicates that 5.6 percent of emergency room visits involving fire injuries result in hospitalisation.⁶² Thus, the analysis of the benefits of a RIP standard assumes that 5.6 percent of serious injuries attributable to cigarette fires would result in hospitalisation.  This assumption yields the distribution of avoided injuries summarised in Exhibit 5-19.

Exhibit 5-19 - Distribution of Serious Injuries Avoided Annually by Treatment Required

Loss Reduction Scenario	Anoxia			Burns			Other Injuries
	Serious Injuries	Hospital	ER-Only	Serious Injuries	Hospital	ER-Only	Serious Injuries	Hospital	ER-Only
Scenario 1	21	1	20	14	1	13	12	1	11
Scenario 2	11	1	10	7	0	7	5	0	5

Based on this distribution of avoided injuries, Exhibit 5-20 summarises the estimated benefits of a reduction in cigarette-fire injuries under each loss reduction scenario.  As the exhibit indicates, the estimated benefits range from approximately $64,000 to $222,000 per year (2002 $CAD).

Exhibit 5-20 - Estimated Annual Benefits of a Reduction in Cigarette-fire Injuries (2002 $CAD)

Loss Reduction Scenario	Civilian Injuries			Fire-fighter Injuries	Total Benefits
	Serious: Hospitalised	Serious: Hospitalised	Minor
Scenario 1	$108,478	$44,077	$11,023	$58,765	$222,343
Scenario 2	$7,777	$22,179	$5,587	$28,543	$64,086

5.5 Total Benefits

5.5.1 Annual Benefits

Exhibit 5-21 summarises the estimated annual benefits of the proposed RIP standard for both loss reduction scenarios analysed.  As the exhibit shows, the estimates range from approximately $114.1 million per year to $228.1 million per year.  In each case, reductions in premature mortality account for approximately 92 percent of the total benefits estimate, while reductions in property damage account for approximately eight percent.  The benefit of reductions in injuries attributable to cigarette-related fires represents less than one percent of estimated total benefits.

Exhibit 5-21 - Estimated Annual Benefits of the Proposed Ignition Propensity Standard (2002 $CAD)

Loss Reduction Scenario	Reduced Fatalities	Reduced Injuries	Reduced Property Damage	Total Benefits
Scenario 1	$208.8 million	$0.2 million	$19.1 million	$228.1 million
Scenario 2	$104.4 million	$0.1 million	$9.6 million	$114.1 million

The values presented above do not take into account the potential impact of the proposed regulations on the demand for cigarettes in the Canadian market.  The regulations could reduce demand in at least two ways: by increasing the price of Canadian cigarettes, and by adversely affecting attributes of the product that consumers consider important.  In a static context, a reduction in the demand for cigarettes as a result of either of these effects would be expected to further reduce the losses attributable to cigarette-related fires, and would also lead to a decrease in other health effects associated with smoking, such as various cancers, heart and pulmonary diseases, and foetal impacts.⁶³  In a dynamic context, however, both an increase in cigarette prices and a change in product attributes could lead smokers to switch to other tobacco products, such as roll-your-own cigarettes, that would not be immediately subject to the RIP standard.⁶⁴ Should this occur, the practical benefits of the standard could be reduced.

As described elsewhere in this report, analysis of the costs of complying with the proposed regulations suggests that the impact on cigarette manufacturing costs would not be likely to result in a substantial price increase.  Thus, the potential increase in the price of cigarettes should not itself spur a major shift in demand to other tobacco products.  It is more difficult, however, to predict the effect that imposition of the proposed ignition propensity standard would have on demand for roll-your-own cigarettes.  Moreover, even if consumption of roll-your-own cigarettes increased, the impact on the practical benefits of the standard is unclear.  

Imperial Tobacco states, in its response to the consultation paper issued by the Tobacco Control Programme, that roll-your-own products are potentially less fire safe, and that an increase in their use may result in an increase in fires. ⁶⁵ However, a report on the health impacts of reduced ignition propensity cigarettes in New Zealand states that "'roll-your-own' hand-rolled cigarettes tend not to smoulder if they are not smoked at frequent intervals.  Whether or not these hand-made cigarettes would test positive in some of the standardised tests on fabrics and furniture is unknown, but it is likely that they would have a lessened ignition propensity."⁶⁶ The same report also suggests that an observed decrease in the incidence of cigarette-ignited fires in New Zealand could be the result of an increase in the share of smokers who roll their own cigarettes.

Imperial Tobacco states, in its response to the consultation paper issued by the Tobacco Control Programme, that roll-your-own products are potentially less fire safe, and that an increase in their use may result in an increase in fires.⁶⁵ However, a report on the health impacts of reduced ignition propensity cigarettes in New Zealand states that "'roll-your-own' hand-rolled cigarettes tend not to smoulder if they are not smoked at frequent intervals.  Whether or not these hand-made cigarettes would test positive in some of the standardised tests on fabrics and furniture is unknown, but it is likely that they would have a lessened ignition propensity."⁶⁶ The same report also suggests that an observed decrease in the incidence of cigarette-ignited fires in New Zealand could be the result of an increase in the share of smokers who roll their own cigarettes.

In light of the uncertainties noted above, the analysis does not include a detailed assessment of the sensitivity of estimated benefits to shifts in consumer demand that might occur as a result of the RIP standard.  Clearly, if the ignition propensity of hand-rolled cigarettes is greater than that of RIP cigarettes, an increase in their consumption would reduce the benefits of the RIP standard; however, if the ignition propensity of these cigarettes is similar to that of RIP cigarettes, an increase in their consumption would have no effect.

5.5.2 Present Value of Benefitss

For purposes of this regulatory analysis, a discount rate of three percent is used which reflects current estimates of the consumption rate of interest. ⁶⁷ Applying a three percent discount rate, the present value of estimated benefits ranges from approximately $3.8 billion to $7.6 billion.  These present value figures are based on an assumption that the annual benefits of a cigarette ignition propensity standard would remain constant in perpetuity.

For purposes of this regulatory analysis, a discount rate of three percent is used which reflects current estimates of the consumption rate of interest.⁶⁷ Applying a three percent discount rate, the present value of estimated benefits ranges from approximately $3.8 billion to $7.6 billion.  These present value figures are based on an assumption that the annual benefits of a cigarette ignition propensity standard would remain constant in perpetuity.

Whether the annual benefits estimated above would be realised in perpetuity is uncertain.  As previously discussed, analysis of cigarette-related fire losses in recent years reveals no clear upward or downward trend.  In the long run, however, it is conceivable that cigarette-related fire losses would decline, even in the absence of an ignition propensity standard.  Several factors - in particular, a reduction in smoking prevalence - might contribute to such a decline.⁶⁸ If such changes occurred, the incremental benefits of maintaining the standard would diminish.

To illustrate this point, Exhibit 5-22 presents recent data on smoking prevalence in Canada.  The exhibit shows a relatively steady annual decline in smoking prevalence since 1985.  Linear regression analysis suggests that if this trend were to continue, smoking prevalence would approach zero in 2039.  If smoking prevalence were to decline in this fashion, it is reasonable to anticipate that the fire losses attributable to cigarettes would also decline, and that the incremental benefits of a cigarette ignition propensity standard would be significantly diminished.

To test the potential impact of this trend on the benefits of the proposed standard, the analysis uses the trend line estimated above to project smoking prevalence from 2004 through 2039.  It then scales the estimated annual benefit of the proposed standard in each year by the estimated reduction in smoking prevalence (e.g., smoking prevalence in year 2020 is estimated to be 56 percent of that in 2004; thus, the estimated annual benefit of the RIP regulations in 2020 would be only 56 percent of the full annual benefit estimated for 2004).  Exhibit 5-23 shows the impact of this calculation on the estimated benefits using the same discount rate employed previously.  In this case, the present value of estimated benefits would be approximately 41 percent of the present value of the constant annual benefits stream.

Exhibit 5-23 - Present Value of the Estimated Annual Benefits of the Rip Standard, Assuming Annual Benefits Decline in Proportion to an Estimated Annual Decline in Smoking Prevalence
(2002 $cad, millions)

Loss Reduction Scenario	Initial Annual Benefit	Present Value of Annual Benefits
Scenario 1	228.1	3,104.3
Scenario 2	114.1	1,552.2

5.6 Summary

The analysis above characterises the damages attributable to cigarette-ignited fires in Canada and estimates the potential benefits of Health Canada's proposed ignition propensity standard.  Its key findings, which are subject to the limitations of the available data, are as follows:

• Manufactured cigarettes on average ignite approximately 2,085 fires in Canada each year.  On an annual basis, these fires account for an average of 53 deaths, 227 injuries, and $28.1 million (2002 $CAD) in property damage.
• The effects of a RIP standard in reducing fire losses is uncertain.  In light of this uncertainty, the analysis examines two benefits scenarios, ranging from 34 percent to 68 percent reduction in annual fire losses.
• These loss reduction scenarios yield estimated annual benefits of $114.1 million to $228.1 million (2002 $CAD).  These benefits stem primarily from estimated reductions in fire-related fatalities.
• The present value of the annual benefits noted above depends upon their duration and the discount rate employed.  Under a three percent discount rate and assuming a constant annual stream of benefits, the present value of the RIP standard's benefits ranges from $3.8 billion to $7.6 billion (2002 $CAD).  To the extent exogenous factors might contribute to a future decline in cigarette-fire losses, the benefits of a standard would be diminished.

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³⁶ As used here, the term "smoker's articles" includes cigarettes, cigars, and pipe contents along with lighters and matches when used in conjunction with smoking.

³⁷ Council of Canadian Fire Marshals and Fire Commissioners, Fire Losses in Canada: Annual Reports, available online at http://www.ccfmfc.ca/stats/stats_e.html.

³⁸ CCFM&FC uses the term "smoker's materials" to refer to cigarettes, pipe contents, cigars, ashtray contents, and matches and lighters when used in conjunction with smoking. This report uses the term "smoker's articles" to be consistent with the AlphaLINK report (see Chapter 1, Footnote 1).

³⁹ The CCFM&FC data also report fires caused by "smoker's material and open flame." This ignition source category includes fires caused by smoker's articles, matches and lighters not used in conjunction with smoking, lamps, lanterns, candles, tapers, torches, welding materials, and hot ashes and embers not associated with smoking.

⁴⁰ In order to control for inflation and provide a consistent basis for analysis, all property damage values are converted from nominal terms to 2002 Canadian dollars using Statistics Canada's Consumer Price Index. For additional information on this index, see: Statistics Canada, CANSIM II, table 326-0002 and Catalogue nos. 62-001-XPB and 62-010-XIB.

⁴¹ The R 2 value indicates the correlation between the observed data and the values predicted by the trend line fitted to the data. R 2 values can range from zero (no correlation) to one (perfect correlation). There is no statistical standard for determining when an R 2 value is significant. The values reported here, however, are too low to suggest that the incidence of smoker's article fires or fire losses is increasing or decreasing. Given the lack of an observable trend, the use of mean values for the 1992-2000 period provides a reasonable basis for characterising the conditions that would prevail in the absence of a RIP standard.

⁴² In response to a request for more detailed information on fires caused by smoker's articles, Tom Makey, Secretary and Treasurer of CCFM&FC, suggested contacting the Alberta Fire Commissioner's Office, the British Columbia Office of the Fire Commissioner, the Ontario Office of the Fire Marshal, the Quebec Civil Security and Fire Safety Office, and the Saskatchewan Office of the Fire Commissioner. Examination of the data from these provinces indicates that Ontario and Quebec distinguish between fires caused by "lit smoker's materials" (a category that includes manufactured cigarettes, roll-your-own cigarettes, cigars, and other lit tobacco products) and other kinds of smoker's articles. In contrast, Saskatchewan and British Columbia make no such distinction. Of the provinces contacted, only Alberta records statistics on fires and fire losses specifically attributed to cigarettes.

⁴³ The Alberta data do not explicitly indicate whether statistics on fires and fire losses attributed to cigarettes pertain solely to manufactured cigarettes, or to both manufactured cigarettes and roll-your-own cigarettes. The analysis presented in the main body of this chapter assumes the latter.

⁴⁴ In 2002, approximately 37.6 billion manufactured cigarettes, 2.3 billion tobacco sticks (or tobacco for filling tubes), and 3.8 billion cigarette equivalents (as fine-cut tobacco) were sold in Canada (Personal communication, Tobacco Control Programme). Therefore, manufactured cigarettes accounted for approximately 86 percent of all cigarette equivalents sold in Canada in 2002; the remaining 14 percent was accounted for by hand-rolled cigarettes and tobacco sticks or tubes.

⁴⁵ "Lit smoker's materials" is a subset of "smoker's articles" and does not include matches and lighters even when used in conjunction with smoking.

⁴⁶ Office of the Fire Marshal, Ontario , "Ontario Civilian Fire Injuries: age, injury type and severity," April 23, 2003 ; received from Alison Wilson, Co-ordinator, Data Services, OFM, August 8, 2003.

⁴⁷ Personal communication with Alison Wilson, Co-ordinator, Data Services, Office of the Fire Marshal, Ontario , August 8, 2003.

⁴⁸ Office of the Fire Marshal, Ontario , "Ontario Civilian Fire Injuries: age, injury type and severity," April 23, 2003 ; received from Alison Wilson, Co-ordinator, Data Services, OFM, August 8, 2003.

⁴⁹ A copy of this document can be obtained for a fee by contacting ASTM International, 100 Bar Harbor Drive, West Conshohocken , PA 19428-2959 , USA ; phone: (617) 832-9585; www.astm.org.

⁵⁰ The correlation between the two tests was measured using a Kendall 's Tau Correlation Coefficient. This test is sensitive to the agreement in the relative rankings of ignition propensity between the experimental tests and the ignition of actual furniture by cigarettes. The Kendall 's Tau Correlation Coefficient equalled 0.73, meaning that the two experiments ranked the ignition percentages of identical cigarettes similarly. The null hypothesis that the ignition tests and the ignitions on actual furniture were not related was rejected at a significance level of 0.01 percent. See: Gann, R.G., et al., 1987, The Effect of Cigarette Characteristics on The Ignition of Soft Furnishings, Technical Study Group on Cigarette and Little Cigar Fire Safety, Center for Fire Research, National Bureau of Standards, 97.

⁵¹ Ohlemiller, T., et al., 1993, Test Methods for Quantifying the Propensity of Cigarettes to Ignite Soft Furnishings, NIST Special Publication 851, Report 2, Washington , DC , page 80.

⁵² Ohlemiller, T., et al. (1993), page 102.

⁵³ The terms 'anoxia' and 'asphyxia' are used interchangeably

⁵⁴ For more information on the VSL approach, see "Chapter 5: Analysing Benefits (Draft)," prepared for Health Canada's Healthy Environments and Consumer Safety Branch by Industrial Economics, Incorporated, 2002; or U.S. Environmental Protection Agency, 2000, Guidelines for Preparing Economic Analyses, EPA 240-R-00-003.

⁵⁵ For information on the development of this VSL estimate, see: Chestnut, L.G., D. Mills, and Stratus Consulting, 1999, Air Quality Valuation Model Version 3.0 (AQVM 3.0), Report 2: Methodology, p. 5-20. The VSL estimate obtained from this source is adjusted for inflation using the Canadian Consumer Price Index (CPI), which is maintained by Statistics Canada. The effect of using other VSL estimates is discussed in the sensitivity analysis in Chapter 6.

⁵⁶ Lost work time is often referred to as "lost productivity" in the economic valuation literature.

⁵⁷ Several studies examine the ratio of individual willingness to pay to health care costs (see U.S. Environmental Protection Agency, 2000, Appendix B, Handbook for Non-Cancer Health Effects Valuation, prepared by the Social Sciences Discussion Group with assistance from Industrial Economics, Incorporated; and David M. Stieb et al., 2002, Economic evaluation of the benefits of reducing acute cardiorespiratory morbidity

⁵⁸ D. Ray, W. Zamula, T. Miller, P. Brigham, M. Cohen, J. Douglass, M. Galbraith, D. Lestina, V. Nelkin, N. Pindus, and P. Smith-Regojo, 1993, Societal Costs of Cigarette Fires, Report 6, U.S. Consumer Product Safety Commission. Appendix A, "Estimating the Costs to Society of Cigarette Fire Injuries: Final Report," presents the health care cost data.

⁵⁹ Miller, et al. also provides information on the cost of treating patients whose injuries ultimately prove to be fatal. The potential benefits of a RIP standard include a reduction in these costs. According to Miller, et al., however, the average period of hospitalisation for burn victims whose injuries ultimately prove fatal is relatively brief, ranging from approximately one to four weeks. In the context of this analysis, the costs associated with this period of treatment are small. Therefore, the analysis ignores the treatment costs associated with fatal injuries.

⁶⁰ Appendix D explains in greater detail the derivation of the health care cost values the exhibit presents.

⁶¹ Personal communication between Alison Wilson, Co-ordinator, Data Services, Office of the Fire Marshal, Ontario and Katherine Wallace, Industrial Economics, Incorporated, August 8, 2003.

⁶² Data on hospital disposition from the National Ambulatory Care Reporting System were provided by the Canadian Institute for Health Information (CIHI); the analyses, conclusions, opinions and statements expressed herein are those of the authors, and not necessarily those of CIHI. The data addressed the following ICD-10-CA External Cause of Injury Codes: X00 (exposure to uncontrolled fire in building or structure); X05 (exposure to ignition or melting of nightwear); X06 (exposure to ignition or melting of other clothing and apparel); X08 (exposure to other specified smoke, fire and flames); and X09 (exposure to unspecified smoke, fire and flames). The data excluded cases in which patients were dead upon arrival or died while in the emergency room. Data on hospital disposition were grouped into two categories: (1) Admitted or Transferred (5.57 percent); or (2) Released or Left Against Medical Advice (94.43 percent). The first category includes the following dispositions of a case: admitted into a reporting facility as in-patient; admitted into a reporting facility as an in-patient to critical care unit; transferred to another acute care facility; transferred to another non-acute care facility; and intra-facility transfer. The second category includes the following dispositions: discharged to place of residence; client registered and left without being seen; client triaged and left before further assessment; client triaged, registered, assessed and left without treatment; and client triaged, registered, assessed and treatment initiated but left before treatment completed.

⁶³ See "Table 1: Hospital separations, days in hospital, and deaths by ICD-9 code attributable to smoking" in Xie, X., L. Robson, E. Single, J. Rehm, and J. Paul, 1999, "The Economic Consequences of Smoking in Ontario," Pharmacological Research 39(3): 185-191.

⁶⁴ Until very recently, research has focused on manufactured cigarettes; thus, there is insufficient information at this time to mandate a standard for other tobacco products such as tobacco sticks, hand-rolled cigarettes or cigars. However, the Department of Health has begun the necessary research to determine the possibility and necessity of mandating ignition propensity standards for other tobacco products.

⁶⁵ Imperial Tobacco Canada, 2003, "A submission presented on behalf of Imperial Tobacco Canada to Health Canada and the Standing Committee on Health in Consideration of the Regulatory Proposal for Reducing Fire Risks from Cigarettes and Bill C-260, An Act to Amend the Hazardous Products Act (fire-safe cigarettes)," January 31.

⁶⁶ Turnbull, F. and J. Fowles, 2001, The Health Implications of Fire-Safe Cigarettes in New Zealand : A Report to the Ministry of Health Services as Part of a Contract for Scientific Services, March.

⁶⁷ The impact of using alternate discount rates is explored in a sensitivity analysis presented in Chapter 6.

⁶⁸ Other factors that might contribute to a reduction in fire losses in the absence of a RIP standard include increased use of smoke detectors and increased use of fire resistant bedding and upholstery. The effect of these trends, however, is at least partially reflected in the baseline fire loss data. Whether these factors will result in additional improvements in fire safety in the future is unclear.