Air Pollution: Calculating The True Cost Of Poor Air Quality

Air pollution is a pressing global issue, with 99% of the world's population living in areas exceeding the WHO's air quality limits. The negative health impacts of air pollution are well-documented, but what about the economic costs? The US EPA and WHO have developed various tools and methodologies to estimate the economic impact of air pollution, including the Control Strategy Tool (CoST) and the Benefits of Action to Reduce Household Air Pollution (BAR-HAP) tool. These models consider factors such as emission reductions, engineering costs, and the costs of control strategies. The economic costs of air pollution are significant, with the US losing approximately 5% of its yearly GDP ($790 billion in 2014) due to air pollution damages. While air pollution damages have decreased in recent years, certain economic sectors, such as agriculture, utilities, manufacturing, and transportation, contribute disproportionately to these costs.

Morbidity and mortality costs

To quantify morbidity costs, detailed data is required, including the concentration-response relationship, the size of the population at risk, and the prevalence of morbidity. However, this level of information is currently limited to a small number of countries. To estimate global morbidity impacts, the EU Clean Air Policy Package studies are used to extrapolate morbidity as a multiplier of mortality from air pollution exposure. This approach assumes a linear relationship between mortality and morbidity, which simplifies calculations but may overlook non-linearities and the complex connection between air pollution exposure and illness.

The valuation of welfare costs associated with morbidity and mortality due to outdoor air pollution is a comprehensive process. It involves multiplying each impact, such as hospital admissions, cases of illness, and mortality, by the estimated unit welfare cost of each impact. The welfare costs of air pollution-related mortality are derived from a meta-analysis of individuals' willingness to pay (WTP) for a reduced risk of mortality. By aggregating these WTPs, the Value of a Statistical Life (VSL) metric can be determined, which assigns a monetary value to life and helps estimate the welfare costs of mortality.

Additionally, the Benefits of Action to Reduce Household Air Pollution (BAR-HAP) tool, provided by the WHO, can be utilized to compare the costs and benefits of various interventions. This tool can aid in decision-making by analyzing the economic and health impacts of different strategies to reduce household air pollution. Furthermore, the US Environmental Protection Agency (EPA) plays a significant role in developing and applying methodologies for estimating the costs of air pollution regulations. The EPA provides various resources, such as cost methodology manuals, spreadsheets, control strategy software, and databases, to support the quantification and analysis of air pollution control costs.

Cost analysis models

The US Environmental Protection Agency (EPA) has developed several cost-related models and tools to estimate the costs of air pollution regulations. The EPA Air Pollution Control Cost Manual provides guidance on developing accurate and consistent costs for air pollution control devices. It focuses on point source and stationary area source air pollution controls for volatile organic compounds (VOCs), particulate matter (PM), oxides of nitrogen (NOx), and certain acid gases (mainly SO2 and HCl). The manual includes cost methodology manuals, spreadsheets for cost estimation, control strategy software, and databases of emission control measures.

The Control Strategy Tool (CoST), developed in 2008, is part of the EPA's Emissions Modeling Framework (EMF). CoST estimates emissions reductions and engineering costs associated with control strategies applied to point and area sources of air pollutant emissions. It does so by matching control measures to emissions units/sources in the emissions inventory using source classification codes. CoST allows users to insert emissions inventories from the EMF, insert new control measure data, and track their analyses to create summary reports and output files. The EPA updates the engineering cost equations in CoST as needed.

In addition to CoST, the EPA also develops and publishes reports such as Regulatory Impact Analyses (RIAs) and Economic Impact Analyses (EIAs), as well as databases and models. These resources provide analytical guidance and insights on conducting cost, benefit, and economic impact analyses of air quality management strategies, programs, and regulations. The EPA's cost reports detail the capital and annual costs of regulations and provide information on how these costs are estimated.

Cost of air pollution by sector

The cost of air pollution can be quantified by examining the economic impact on various sectors. While the overall cost of air pollution is significant, it is important to break it down by sector to identify the most affected areas and prioritize mitigation strategies. According to research, the top four sectors responsible for the highest external damages are agriculture, utilities, manufacturing, and transportation. These sectors contribute just under 20% of GDP but account for over 75% of all air pollution-related damages.

Let's take a closer look at the cost of air pollution in each of these sectors:

Agriculture

The agriculture sector includes activities such as animal production, aquaculture, and crop production. In 2014, the US agriculture sector incurred $230 billion in air pollution damages, making it the economic sector with the highest level of damages. The use of fossil fuels and other emissions associated with agricultural practices contribute to air pollution, impacting human health and the environment.

Utilities

The utilities sector, which includes energy production and distribution, has seen a significant decrease in damages from 2008 to 2014, with a more than 50% reduction. In 2014, the sector incurred $150 billion in air pollution damages. The shift from higher-polluting coal to cleaner energy sources like natural gas and renewables has likely contributed to this decrease.

Manufacturing

The manufacturing sector has also made progress in reducing air pollution damages, with a 20% decrease from 2008 to 2014. However, certain heavy manufacturing industries continue to contribute to emissions and the associated costs. The retirement of some heavier manufacturing industries during the Great Recession may have played a role in reducing emissions and damages.

Transportation

The transportation sector, including road, air, and water transportation, has seen a 30% decrease in damages from 2008 to 2014. While there has been progress, water transportation, in particular, still entails large damages from air pollution compared to its economic value.

It is important to note that the cost of air pollution extends beyond these sectors and impacts other industries and aspects of society. For example, air pollution has been linked to increased healthcare costs due to respiratory diseases, cardiovascular diseases, and other health issues. Additionally, the impact on labour productivity and participation rates further contributes to the economic burden.

Cost of air pollution by country

The cost of air pollution can be quantified through various methods and models, with a focus on the economic and health impacts. Air pollution is a significant global issue, affecting nearly every country and contributing to millions of premature deaths annually. Here is an overview of the cost of air pollution by country:

Global Impact

According to The Lancet, air pollution is responsible for over 10% of all deaths worldwide, amounting to approximately 4.5 million premature deaths in 2019. This figure includes both outdoor and indoor air pollution, with the latter causing an additional 2 million premature deaths in the same year. Air pollution is a combination of outdoor and indoor particulate matter and ozone, posing risks for various health issues, including heart disease, stroke, lower respiratory infections, lung cancer, diabetes, and chronic obstructive pulmonary disease (COPD).

Country-Specific Impact

The impact of air pollution varies across different countries, with emerging and developing nations often facing greater challenges in meeting global environmental standards. The World Health Organization (WHO) has set a recommended limit of 10 micrograms per cubic meter for particulate matter (PM2.5), but many countries have higher national guideline values. Here are some specific examples of the cost of air pollution in certain countries:

• United States: The US Environmental Protection Agency (EPA) has developed methodologies and tools for estimating the costs of air pollution regulations. The EPA Air Pollution Control Cost Manual provides guidance for calculating consistent and accurate costs for air pollution control devices, focusing on volatile organic compounds (VOCs), particulate matter (PM), oxides of nitrogen (NOx), and specific acid gases.
• European Countries: The WHO European Center on Environment and Health is working on updating the Health Risks of Air Pollution in Europe. This project aims to address the morbidity and economic costs of air pollution in the region.
• Low-Income Countries: Air pollution is often the leading risk factor for death in low-income countries, causing a significant number of premature deaths.

Quantification Methods

The World Health Organization (WHO) has initiated projects like Estimating the Morbidity from Air Pollution and its Economic Costs (EMAPEC) to provide technical support and develop economic assessments of the adverse health effects of air pollution. The Benefits of Action to Reduce Household Air Pollution (BAR-HAP) tool can also be used to compare the costs and benefits of interventions. Additionally, the Institute for Health Metrics and Evaluation (IHME) provides country-specific estimates of deaths attributed to air pollution through its Global Burden of Disease study.

Cost of intervention

The cost of intervention to reduce air pollution can be quantified through various methods and tools, with the ultimate goal of improving public health and mitigating environmental impacts.

The US Environmental Protection Agency (EPA) has developed methodologies and tools, such as the Control Strategy Tool (CoST), to estimate the costs of implementing air pollution control measures. CoST matches control measures to emission sources, allowing for the calculation of engineering and emissions reduction costs. The EPA also provides manuals, spreadsheets, software, and databases to support the estimation of costs for different pollution control strategies.

At a household level, interventions to mitigate indoor air pollution (IAP) have been analysed through cost-benefit studies. These studies have considered the use of cleaner fuels, such as liquefied petroleum gas (LPG) or natural gas, improved cookstoves (ICS), and biogas or electric stoves. The costs of these interventions include fixed and operating costs, fuel costs, stove costs, program costs, and operational costs. The benefits encompass health improvements, increased productivity, time savings, and fuel savings.

On a larger scale, the Global Alliance on Health and Pollution, Air Quality Asia, and Boston College's Schiller Institute for Integrated Science and Society released a report titled "Air Pollution Interventions: Seeking the Intersection Between Climate and Health." This report highlights the cost-effectiveness of transitioning from coal and fossil fuels to renewable energy sources for power production. It also mentions the cost-effectiveness of other interventions, such as reducing sulfur content in fuel and upgrading mass transit systems.

Additionally, the World Health Organization (WHO) has initiatives like the Benefits of Action to Reduce Household Air Pollution (BAR-HAP) tool, which can be used to compare the costs and benefits of different interventions. WHO also provides guidelines and templates for estimating the economic costs and benefits of interventions.

Overall, the cost of intervention to reduce air pollution involves considering the financial expenses and the resulting advantages in terms of health, environmental, and economic gains.

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