Costly Air Pollution: Billions Lost To Poor Air Quality

Air pollution is a pressing issue that impacts the health and economies of countries worldwide. It is responsible for a range of economic costs, from healthcare expenditures to environmental damage and lost ecosystem services. The World Bank estimates that air pollution costs the global economy $225 billion annually in lost income, with an additional $6 trillion in annual global health costs. Furthermore, air pollution causes a decline in productivity, with around 1.2 billion workdays lost globally each year, and a reduction in tourism, as travellers are less likely to visit areas with poor air quality. These economic costs are expected to rise as pollution levels increase due to rapid economic growth, population increases, and insufficient environmental management.

Global economic costs: $2.9 trillion in 2018

Air pollution has far-reaching economic consequences, from healthcare costs associated with pollution-related illnesses and deaths to environmental damage and lost ecosystem services. In 2018, the global economic cost of air pollution was a staggering $2.9 trillion, equivalent to 3.3% of the world's GDP. This figure is expected to grow as the impacts of air pollution worsen.

The economic costs of air pollution are not limited to healthcare expenditures but also include lost labour income. In developing countries, lost labour income due to air pollution can reach nearly 1% of GDP. For example, in South Asia and Sub-Saharan Africa, air pollution results in a loss of 0.83% of GDP, affecting the earning potential of younger populations. Similarly, in India, reduced productivity, work absences, and premature deaths caused by air pollution cost the economy an estimated $95 billion, or 3% of its GDP, in 2019.

Air pollution also impacts the tourism industry, with travellers reconsidering destinations due to poor air quality. A study focusing on China found that travellers exposed to air pollution were 92.857% less likely to revisit a specific city and 93.421% less likely to return to China. This resulted in significant job losses in the tourism sector.

The costs of air pollution extend beyond the economic realm, with serious consequences for environmental health. Various air pollutants damage plants, ecosystems, and agricultural crops, further exacerbating the economic impact.

While the economic costs of air pollution are significant, the benefits of implementing pollution control measures outweigh these costs. Research shows that every $1 spent on air pollution control yields an estimated $30 in economic benefits. This provides a strong case for investing in cleaner technology and green industry development, ultimately improving air quality and mitigating the economic impacts of air pollution.

India's GDP loss: 1% ($2 billion)

Air pollution is a pressing issue that has severe economic implications for countries worldwide. India, in particular, has experienced significant economic losses due to air pollution, amounting to approximately 1% of its GDP, which equates to $2 billion. This loss is a result of the detrimental health effects of air pollution, which leads to premature deaths and morbidity, causing a reduction in productivity and labour income.

The health impacts of air pollution in India are profound, with an estimated 1.67 million deaths attributed to air pollution in 2019, constituting 17.8% of total deaths in the country. The economic cost of these premature deaths is staggering, with a loss of $28.8 billion in 2019. Furthermore, the morbidity associated with air pollution resulted in an additional economic burden of $8 billion in the same year. The total economic loss due to these factors amounted to $36.8 billion, which represented 1.36% of India's GDP.

The impact of air pollution varies across Indian states, with Delhi experiencing the highest per capita economic loss. Other states such as Uttar Pradesh, Bihar, Rajasthan, Madhya Pradesh, and Chhattisgarh also incurred significant losses, with Uttar Pradesh recording the highest loss to overall state GDP at 2.15%. These losses highlight the uneven impact of air pollution within the country.

To address the issue of air pollution, India has taken several steps, including implementing the National Clean Air Programme (NCAP). This programme aims to improve air quality across the country, specifically targeting 132 cities that are falling short of air quality standards. Additionally, the Indian government has committed approximately $1.7 billion to combat air pollution over five years in 42 cities with populations exceeding one million. This funding is contingent on these cities achieving a 15% annual reduction in air pollution levels.

The economic losses due to air pollution in India emphasize the urgency of addressing this issue. By reducing air pollution, India can not only improve the health of its citizens but also strengthen its economy. Successful air pollution reduction strategies will have co-benefits for climate change mitigation, as many air pollutants accelerate global warming. Therefore, India's efforts to tackle air pollution are crucial steps towards a healthier and more prosperous future for the country.

US economy loss: 5% of GDP ($790 billion in 2014)

Air pollution has a significant impact on the US economy, causing an estimated loss of 5% of the country's GDP, which amounted to $790 billion in 2014. This figure underscores the substantial economic consequences of air pollution, which extends beyond the direct costs associated with healthcare and environmental damage.

The economic losses due to air pollution in the US are predominantly driven by a small number of economic sectors. The top four sectors responsible for the highest external damages are agriculture, utilities, manufacturing, and transportation. Together, these sectors contribute just under 20% of GDP but account for over 75% of all air pollution-related damages. The transition towards cleaner energy sources, such as natural gas and renewables, and the decline in coal usage have contributed to the reduction in damages from utilities and manufacturing sectors.

The costs associated with healthcare and environmental damage are significant components of the economic burden of air pollution. The welfare figure incorporates various costs related to air pollution, including health and consumption. The loss of income due to air pollution-related illnesses and premature deaths is a substantial factor. In the US, thousands of people die prematurely each year due to ailments caused by air pollution, resulting in lost labor income and reduced economic productivity.

Additionally, air pollution leads to decreased workplace productivity and increased absenteeism. Higher levels of air pollution are associated with higher absence rates, affecting both students and workers. This translates into lower productivity and, consequently, lower incomes in the long run. The negative impacts of air pollution on health also result in increased healthcare expenditures, further contributing to the economic burden.

The environmental damage caused by air pollution encompasses a range of costs, including the loss of ecosystem services and agricultural impacts. Air pollutants contribute to biodiversity loss, damage to plants and ecosystems, and reduced crop yields, all of which have economic repercussions. However, it is important to note that the implementation of emissions control programs and clean air measures can significantly reduce these economic losses, improve health outcomes, and enhance overall productivity.

Global health costs: $6 trillion

Air pollution has far-reaching consequences for global health, with a staggering economic impact of $6 trillion in annual health costs. This issue is particularly acute in low- and middle-income countries, where 99% of people breathe air that exceeds the World Health Organization's guideline limits. The premature deaths of 8.1 million people each year are attributed to air pollution, making it the leading cause of death after tobacco. Furthermore, air pollution disproportionately affects young children, causing the deaths of almost 2,000 children every day.

The economic impact of air pollution is significant, with global income losses amounting to $225 billion annually. This figure represents the lost income due to both indoor and outdoor air pollution. Regionally, the impact varies, with South Asia and Sub-Saharan Africa losing 0.83% and 0.61% of their GDP, respectively. In 2019, India's economy suffered an estimated loss of $95 billion, or 3% of its GDP, due to reduced productivity, work absences, and premature deaths linked to air pollution.

Certain economic sectors bear the brunt of these costs, with agriculture, utilities, manufacturing, and transportation contributing to almost 75% of air pollution-related damages. For example, in 2014, agriculture incurred $230 billion in pollution damages, surpassing utilities, which incurred $150 billion. However, it is worth noting that these damages have been decreasing over time due to various factors, including the adoption of cleaner energy sources and the decline of heavily polluting industries.

The costs of air pollution extend beyond direct economic losses. Lost workdays due to illness, caring for vulnerable family members, and absenteeism among students contribute to decreased productivity and income. Additionally, air pollution negatively impacts tourism, with travellers reconsidering destinations due to poor air quality. The environmental costs are also significant, with air pollutants causing damage to ecosystems, biodiversity, and agricultural crops.

Despite the challenges, there is a strong case for investing in clean air projects and pollution control measures. The benefits of improved air quality include better health, enhanced productivity, reduced medical expenses, and mitigated climate change impacts. Furthermore, every $1 spent on air pollution control in the USA yields an estimated $30 in economic benefits. Addressing air pollution through policies, data gathering, and emissions reductions is crucial to tackling this global issue.

Labour income loss: 0.83% of GDP in South Asia

Air pollution has a significant impact on the global economy, resulting in an estimated $6 trillion in annual global health costs. According to the World Bank, it leads to a 5% reduction in global GDP due to health impacts, lost productivity, and reduced life expectancy.

In South Asia specifically, labour income loss due to air pollution is a pressing issue. The region's economy comprises 2 billion people, or 25% of the world's population, spread across eight countries. The impact of air pollution on labour income in South Asia is significant, resulting in losses equivalent to 0.83% of the region's GDP. This percentage translates into substantial monetary losses for the region, affecting its overall economic growth and development.

The economy of South Asia has experienced significant growth in recent decades, particularly since the 1980s with economic liberalisation in countries like India. However, the region continues to face economic challenges, including high unemployment and rising income inequality in countries like India. Air pollution-related labour income losses further exacerbate these challenges.

The impact of air pollution on labour income loss in South Asia varies across countries within the region. For example, in the Maldives, tourism is the largest industry, contributing 28% of GDP. Therefore, air pollution can negatively affect this sector by deterring tourists, reducing government tax revenue, and hindering economic growth. In contrast, countries like Bhutan have prioritised protecting the environment and cultural traditions in their economic programs, which may help mitigate the impact of air pollution on labour income to some extent.

Overall, the labour income loss of 0.83% of GDP in South Asia due to air pollution underlines the economic consequences of this issue. It highlights the need for effective policies and measures to address air pollution and mitigate its impact on the region's economy and the livelihoods of its population.

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