Air pollution harms the economy in multiple ways. It imposes costs in terms of healthcare expenses for treating illness and lost worker productivity, damage to vital products like food and cultural monuments as well as ecosystem services being lost.
From an economic viewpoint, an optimal level of pollution is defined as that at which net benefits equal total costs of reduction; emission standards should therefore be set accordingly.
Costs
Air pollution is a global crisis that costs billions annually to our planet in terms of healthcare expenditures, related illnesses and deaths, lost work productivity, environmental harm to ecosystems and climate, reduced tourism numbers and decreased business investment opportunities. Furthermore, it also negatively impacts economic activity through reduced business investment opportunities and higher energy prices for consumers.
Even with such devastating impacts, we have made progress with anti-pollution measures. Emissions of certain key pollutants have dropped substantially over recent decades due to better technology and more stringent laws and regulations; however, much more needs to be done if we wish to reach net-zero emissions targets and ensure safe futures for our children and grandchildren.
Pollutants enter human bodies through multiple avenues, including inhalation. Furthermore, contaminants may enter via food and water contaminants, leading to long-term health issues like obesity, heart disease, diabetes, cancer and other chronic illnesses.
Air pollution not only has negative health consequences for us and the planet as a whole; it can also impact negatively upon the environment by producing acid rain, disrupting wildlife breeding cycles and damaging crops as well as polluting groundwater supplies and corrosion vital infrastructure – making the global cost even higher than just illness or death costs. Air pollution directly threatens natural resources on which humanity relies and affects our quality of life in irreparable ways.
To understand the true costs of air pollution, we must first explore its sources and distribution. Fossil fuels like oil, natural gas, and coal are major sources of air pollutants which are burned for energy production, transportation, agriculture use and to generate an array of chemicals and pollutant particles that release into our environment.
ETC/ATNI research utilizes an impact pathway approach to calculate the marginal damage cost per tonne of key pollutants based on VOLY and VOLS methods, taking into account their estimated global distribution, chemical releases, human health impacts and environmental harms.
Consequences
Air pollution causes severe economic costs worldwide. These range from direct healthcare costs of illness and death, indirect losses due to decreased work productivity, tourism decline, and environmental degradation; it is estimated that fossil fuel combustion caused air pollution is estimated to cost our world an estimated cost of $2.9 trillion!
This number is staggering, yet does not account for other forms of damage associated with air pollution, such as damage to cultural and historical monuments and lost ecosystem services required by society. Furthermore, air pollution causes other direct and indirect costs, such as damaged buildings that cannot be used anymore as well as costs related to restoring natural habitats.
Coal-fired power plants are the leading cause of air pollutants that lead to damages in our air environment, followed by gas combustion at residential and industrial sites, car and truck emissions, agriculture and forestry activities, livestock raising activities and fertilizer applications respectively. SO2 emissions have decreased in recent years which in turn has reduced damage costs.
Research has uncovered indirect costs related to air pollution that significantly lower workforce productivity. This can occur due to both absenteeism due to especially bad pollution levels and decreased work performance when employees are present at their job sites; ultimately resulting in decreased GDP and greater poverty rates among affected populations.
Studies have revealed that air pollution hampers people’s decision-making abilities. One such study demonstrated this by finding that baseball umpires are more likely to make incorrect calls when ambient air contains pollutants; another discovered it reduces individuals’ capacity for selecting different investment opportunities.
Clean air can bring many advantages that far outweigh its costs, from power plant emissions restrictions to encouraging cleaner vehicles and equipment use. Local communities also play an integral part in finding solutions for air pollution issues; many cities and towns have implemented programs designed to lower carbon dioxide levels in their areas.
Clean Solutions
Air pollution poses many threats to human health and ecosystems alike. It decreases happiness, cognitive functioning, work productivity and can even trigger crime; but there are effective solutions available now which reduce emissions from vehicles, households, industry as well as switch to clean energy options, reconsider farming techniques, improve urban planning practices and provide higher returns on investments – these can all be implemented globally or locally and will yield great returns.
Burning fossil fuels is one of the primary contributors to air pollution and climate change. We can lower their impact by making policy adjustments that lessen their damage.
First, we must improve air quality by reducing toxic air pollutants and greenhouse gases. This can be accomplished through stricter environmental regulations or switching out fossil fuels for renewable sources – this will cut emissions that harm human health while simultaneously decreasing household and industrial emissions. As part of this second step, replacing traditional stoves, lamps, fuels with low emission alternatives is also crucial – this will further decrease air pollution, slow climate change, benefit millions around the globe and reduce costs significantly.
Finally, urban planning must be enhanced to promote innovation and the creation of green jobs. This can be accomplished by encouraging green building developments, providing public transit options like bike lanes and creating policies to promote cleaner production and consumption practices.
Now there are numerous eco-friendly technologies that can assist in reducing harmful air pollutants. Catalytic converters can convert dangerous air pollutants to less dangerous ones while solar photovoltaic cells produce electricity without using fossil fuels; and there are new fuels and vehicle engines available that are more energy-efficient than their predecessors – these new innovations all contribute towards decreasing harmful air pollutants while simultaneously producing significantly fewer greenhouse gas emissions.
Though there are multiple strategies available to address air pollution, governments and businesses must commit to taking actions both globally and locally to combat air pollution. Strengthen global partnerships while expanding public-private dialogue are all vital in order to tackle such an important issue as quickly as possible.
Conclusions
Air pollution imposes significant economic costs, particularly when it results in missed workdays due to illness or the care needs of children or elderly family members who are particularly sensitive to air pollutants. Businesses also suffer when workers miss work due to poor air quality – according to Graff Zivin & Neidell studies conducted between 2010-2012 they discovered that air pollution reduced productivity by an average annual reduction of 6%!
Air pollution damages the environment in ways that cannot be fully captured by monetary valuations, including injuring crops and forests, damaging building materials, degrading visibility and ecosystem destruction caused by pollutants like nitrogen oxides from power plants or ammonia from livestock farming and fertilizer applications (ammonia leakage from livestock farm).
Studies also indicate that air pollution decreases our decision-making abilities; one study of professional baseball umpires demonstrated this fact; they are more likely to make incorrect calls when ambient air quality worsens, according to one research paper. Other research demonstrates how pollution may cause investors to mismanage their investments by increasing disposition bias (selling successful assets while holding on to failing ones) leading them to sell winning assets but keep failing ones on their portfolios.
While some economists assert that environmental regulations hurt employment in the short run, mainstream academic economic research disproves such claims. Instead, it reveals that new environmental regulations tend to create jobs in industries affected by them over time. Furthermore, research conducted by the World Bank revealed that adopting policies aligning US air quality targets could boost GDP by up to 10%!
As shown by the map below, relatively few facilities account for most external air pollution damage costs. Europe’s major polluting facilities can be found in Germany, UK, Poland and Spain; most emit toxic air pollutants by means of thermal power plants using coal or gas combined with coal as their primary energy source. When assessed on an environmental performance index basis these facilities also rank highly when measured against national GDP.
