Pollution's toll

The costs of air pollution and the lack of clean drinking water are huge.
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Estimates suggest that many pollution control projects in low and middle countries will pass the benefit-cost test based solely on health considerations.
2 per cent of gross domestic product: value of lost productivity from premature deaths to pollution in low income countries.

In 2015, according to the Global Burden of Disease study, over 9 million deaths — 16 per cent of the total — were attributable to pollution, specifically to lack of access to clean water and sanitation, household burning of solid fuels for cooking, outdoor air pollution or exposure to lead. Virtually all deaths due to lack of safe water and sanitation and three-quarters of those due to indoor air pollution occurred in either low or low-middle income countries, as did half the deaths attributable to outdoor air pollution. Upper-middle income countries accounted for just one-quarter of deaths due to indoor and 40 per cent of deaths associated with outdoor air pollution.

The economic costs of premature death associated with pollution – and of the illness that precedes death – are huge. They include losses in productivity, which affect a nation’s economy, and losses in income, which can impoverish a family. Life years lost due to premature death result in a loss in enjoyment both to those who die and to their families.

The recent report from the Lancet Commission on Pollution and Health, of which I am a member, quantifies part of the economic burden that these deaths impose. It estimates the future output lost when a person dies before the end of his working life – specifically, the gross national product that is forgone. This, however, is a vast underestimate of what studies throughout the world have indicated people are willing to pay to reduce their risk of dying, which reflects the loss in the enjoyment of living as well as the loss in output. So the Commission report also estimates what people would pay to reduce their risk of dying, multiplied by the risk of death associated with pollution.

The lost productivity when people die prematurely – the loss of output that they would have produced – is considerable. For low income countries (those with per capita incomes below $1,025 in 2015), this amounts to about 2 per cent of gross domestic product; for low-middle income countries, it is about 1 per cent. In low income countries, over 1 per cent of gross domestic product is lost due to lack of access to clean water and sanitation, with the remainder attributable to household and outdoor air pollution. In low-middle income countries, productivity losses are similarly evenly divided between lack of access to water and sanitation and air pollution.

The amount people are willing to pay to reduce their risk of dying, multiplied by the risks of death due to pollution, are much higher. Aggregated over all countries and five categories of pollution, it adds up to $4.6 trillion in 2015 – approximately 6 per cent of world output. The value of willingness to pay is much higher in dollar terms in high income countries than in low income ones, since willingness to pay is conditioned on ability to pay. But it is larger in low incomes ones as a percentage of gross domestic product, due to the much higher death rates associated with pollution in developing countries.

We estimate the sum of willingness to pay to reduce risks of death from pollution to zero, in 2015, at about 8 per cent of gross national product in low income countries, and 9 per cent in low-middle income ones. This corresponds, in low income countries, to a willingness to pay per person of $18 to reduce risk of death from air pollution to zero and $12 to do the same for risk of death from unsafe water and sanitation. The corresponding figures are $370 and $140 for low-middle income countries.

Both the productivity losses and broader willingness to pay estimates reflect only the benefits of reduced mortality from pollution. The costs associated with pollution-related illness while people are alive, including medical costs, are more difficult to estimate, especially on a country-by-country basis. We do know that in countries where the morbidity impacts of pollution have been quantified – such as in Colombia and China – morbidity costs are over 25 per cent of the costs associated with premature mortality. In one low-middle income country, Sir Lanka, the health costs associated with air pollution alone amounted to 7 per cent of total health spending in 2005.

These estimates suggest that many pollution control projects in low and middle countries will pass the benefit-cost test based solely on health considerations. Taking other economic impacts into account only strengthens the case for action. Air and water pollution reduce crop yields, impair timber growth and harm freshwater ecosystems. The aesthetic damages associated with pollution themselves harm economic growth. The case for reducing pollution is, however, overwhelming on public health grounds alone.