Air pollution not only affects human health, but also the economy. Effective clean air actions sanctioned by governments have been found to improve individual health and productivity, thus providing clear economic benefits.
How air pollution affects the economy
According to the World Bank, the aggregate cost of welfare losses occurring from premature deaths due to air pollution was more than US$5 trillion in 2013. This number includes $225 billion in lost labour income. The main causes for economic losses due to air pollution are:
- Loss of workforce (increased risk of disease and chronic illnesses, premature deaths)
- Decreased productivity (decreased cognitive functions)
- Damaged ecosystems and biodiversity (destruction of natural resources)
- Accelerated climate change (emissions of greenhouse gases and short-lived climate pollutants)
In the EU specifically, air pollution was linked to costs of US$1.6 billion for 600,000 premature deaths and US$1.6 billion in economic damages in 2010, which amounted to 10% of the region’s GDP. In the US, damages caused by air pollution are equivalent to 5% of the country’s yearly GDP, which was $790 billion in 2014. In East Asia and the Pacific region, welfare losses from air pollution were $2.3 trillion in 2013, and in South Asia, the losses were $604 billion. In Africa, the cost of premature deaths from indoor air pollution was $232 billion in 2013 and the cost of premature deaths from outdoor air pollution was $215 billion.
Healthcare costs incurred from air pollution are significant as well. According to the Organization for Economic Co-operation and Development (OECD), they amounted to US$21 billion in 2015, and are expected to rise to an annual US$176 billion by 2060.
Researchers also found that air pollution influences the stock market. A 12% reduction in stock returns occurs with every one standard deviation decrease in air quality. This is because exposure to bad air causes a negative emotional state and decreases cognitive ability. Both of these lead to a lack of appetite for risk, which then results in lower stock returns.
How positive air quality actions improve the economy
Reducing air pollution has been found to provide immediate benefits. The 13-month closure of a steel mill in Utah found hospitalizations for pneumonia, bronchitis, asthma, and pleurisy cut in half in the first four weeks. Similarly, a 17-day “transportation strategy” implemented during the 1996 Olympic Games in Atlanta, Georgia found that the resulting decrease in air pollution led to a 40% drop in children’s visits to asthma clinics, a 11% drop in trips to the emergency department, and a 19% drop in hospitalizations for asthma in the first four weeks.
In the United States, the enactment of the Clean Air Act of 1970 and its amendments ended up reducing major pollutant emissions by 73% from 1990 to 2015, while the GDP grew by 250%. The monetized health benefits of this legislation exceeded the implementation costs by 32:1, valuing at $2 trillion in 2020. This is attributed to 230,000 avoided deaths from outdoor particulate matter per year, 7,100 premature mortality from ground-level ozone exposure per year, 200,000 fewer cases of acute myocardial infarction per year, 66,000 fewer hospital admissions for respiratory illnesses per year, and 2.4 million fewer asthma attacks per year.
An EU clean air outlook report conducted research into the positive economic impact of current policy scenarios dealing with air pollution from 2005 projected to 2030. Costs from lost working days due to air pollution are expected to drop from €18.5 billion per year to €8.5 billion per year and costs from drop in productivity from €66 billion per year to €30 billion per year.
From all this, it is evident that dismissing the issue of air pollution not only has an impact physically, but also financially. At Breeze Technologies, our AI-powered air quality sensors provide real-time, hyperlocal data on pollutants, which can be leveraged to determine the effectiveness of current clean air actions and help develop new targeted ones for maximum impact. It is our mission to improve the efficiency and effectiveness of clean air action plans by 10X based on environmental data and insights. Contact us today to help create a cleaner, healthier, and wealthier future.