Air Quality as a Business Case Part 2: Effects of Pollution on Economy

This post is about the economic impacts of air pollution and is part of a three-post series discussing the different effects of pollution on society.  In many ways, the economic effects are very connected to the health ones, and, as will be explained in the third part of the series, these impacts are very connected to the environmental effects of pollution.

Due to air pollution related causes, more than $5 trillion is lost in welfare expenses around the world. This includes health care costs, effects on consumption, quality of life, production output and innovation, agriculture, and tourism, among many others.1 This major expense is comparable to an expense costing the GDP of Japan in 2016, the third largest GDP in the world!2

The affects of air pollution on the world’s economy and society can be broken down into three major categories: economy of health, economy of production and economy of culture.

Economy of Health

Due to the dangerous effects of air pollution on human health, millions of people each year die prematurely or are too sick to work, resulting in a weaker and smaller work force, costing society billions of dollars. In 2012 the World Health Organisation reported that about 7 million people died from air pollution, or one in eight deaths. The World Bank estimates that the costs of these deaths in 2013 were about $225 billion in foregone labor income every year; this number has grown from $163 billion in 13 years, an unbelievable and terrifying growth rate.

The $225 billion accounts for the premature deaths and sick days taken because of air pollution.  Air pollution has disastrous effects on the economy in China specifically; in 2013, China lost 10% of its GDP to air pollution effects, nearly the entire GDP of Mexico.1

So beautiful world. Professional pediatrician holding stethoscope and examining infant while being enticed in work

Economy of Production

Among the extreme effects of premature death and heart attacks, air pollution can also affect people’s IQ and output. Research has shown that air pollution affects the fetus and can result in slightly lower IQ, “enough to hamper school performance and perhaps lifelong learning”.3 This can have huge economic consequences from the loss of innovation and productivity.

Agriculture also experiences large impact from air pollution. Crops both contribute and are affected by air pollution. Fertilisers used in many crops produces ammonia emissions that react to produce NOx, SO2, and PM2.5. These pollutants then stick to plant exteriors and block sunlight, decreasing crop yields. The World Bank and Chinese Environmental Authority estimated a cost of $4.4 billion a year in China alone due to acid rain and air pollution.4

Economy of Culture

Cities with dangerous levels of air pollution also suffer in business because they cannot compete with cleaner cities. Senior executives and other educated people are not as willing to move to these extremely polluted cities and risk their health and lifestyle choices. About 48% of business in China said it was hard to keep or recruit employees to work for them in China.6 Therefore, the businesses suffer because they cannot retain the best employees and HR costs are higher due to the struggle to find and hire employees.

Similarly, tourism is impacted by pollution because tourists fear the health ramifications and low visibility. In 2013, Beijing saw a 15% decrease in tourism resulting in massive costs to the economy.7 Visitors often choose a different location if they think the poor air quality will affect their health or their visit. For areas that rely on high tourism, this can be a large hit on their local economies.

Unfortunately, low-income people are often the hardest hit by air pollution and its effects. It is common for the poor to live or work in highly polluted areas such as factories, and do not have the resources to avoid or protect themselves from this dangerous pollution.  Often, if they have respiratory issues or other health problems, they do not have the health resources to prevent or help these concerns. The cooking stoves that rely on burning wood or coal in developing countries also harm and kill many people, especially women and children due to the black carbon that is emitted in these processes.

To summarise, air pollution has destructive consequences on health resulting in premature deaths and more sick days, but it does not stop there. It also affects agriculture by decreasing crop yields, makes business less competitive, and hurts tourism, therefore costing the economy trillions of dollars.

By limiting exposure to air pollutants, society can benefit in so many ways. Placing Airlabs technology in air pollution hotspots, such as outdoor cafes and sidewalks, can reduce the harm of such pollution on peoples’ lives. This allows for less detriments to health and therefore smaller costs on the economy, culture, and society.

Health, economy, and the environment are extremely connected, and one cannot be looked at in a vacuum. Consequently, when making major decisions that regard society, all three categories should be considered. This, in essence, is being sustainable. By taking into consideration the health of humans and the environment while still being profitable, all of society can prosper.

Read the other two parts in this series about the effects of pollution on the healthand the environment!




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