REPORT TITLE

2018

AUGUST 22

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Contents
The Economic Consequences of Outdoor Air Pollution in India...................................3
Abstract...................................................................................................................3
Outline....................................................................................................................4
The Economic Consequences of Outdoor Air Pollution in India...................................5
Subtitle Text Here....................................................................................................5

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The Economic Consequences of
Outdoor Air Pollution in India
Abstract
Air pollution is one of the most severe risks to the environment. Latest Global Burden
of Disease (GBD) study estimated that air emissions – indoor and outdoor combined –
has been the cause of 5.5 million early deaths worldwide in 2018. Air pollution also has
further effects on human health, leading to a growing number of respiratory problems
and cardiovascular diseases. Moreover, it has an impact on crop yields and on the
environment, with effects on biodiversity and ecosystems, among other things. These
impacts have substantial economic consequences, which will impact economic growth
and welfare. Poor air quality is one of the more serious environmental concerns in
urban areas around the world, particularly in developing countries. Recent studies
which assess and value negative health impacts of being exposed to particulates reveal
the magnitude of the costs to the society that demands immediate actions. The paper
shows that India seems to bear a very elevated level of these costs by international
comparison. It analyses some latest discoveries in quantifying the impact of exposure
to particulates on mortality with a distinct reference to India and discusses the issues
of economic estimate of sickness and premature death owing to air pollution, with the
focus on developing countries. Further, the paper analyzes, illustrating upon the case
study of Mumbai, the relative impact of many pollution sources about exposure levels
and health outcomes, plus the health benefits of specific management measures and
policies. The final section highlights a set of issues and recommendations regarding a
better amalgamation of environmental and health considerations into pollution control
decisions.
“Air pollution already affects people's health, agriculture and
leads to a variety of other consequences. Such impacts are
projected to become far more severe over the coming decades.”

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Outline
 The health burden of pollution in India: a global comparison assessment.
 Significance of health costs with respect to other damages due to air emissions.
 Health effects and the priorities for controlling pollution: a case of Mumbai.
 The necessity for integrating health care and environmental policies.

Modeling Economic Implications of Outdoor Air Pollution

Modelling economic impact of outdoor atmospheric pollution requires multiple steps
that link the economic activities to emissions, concentrations, exposure, biophysical
impacts and ultimately determining the value of economic costs.

Economic Emissions Concentrations Biophysical

Economic
Activity Impacts
Costs

The total cost of dithering on outdoor air pollutants include both market and non-
market costs. Market costs are the ones that are associated with bio-physical impacts
directly affecting economic activity as measured by national accounting and GDP. For
example, lower agricultural yields affect agricultural output. Non-market cost includes
monetized welfare expenses of mortality (premature deaths), as well as of the
disutility of the disease (pain and suffering).

The market impacts, which in this study comprise additional health expenditures due
to illness, labor productivity losses due to absences from work for illness, and
agricultural yield losses, are included in the ENV-Linkages model to calculate the global
and regional costs of outdoor air pollution on sectoral production, GDP and welfare.
Thanks to the general equilibrium framework of the ENV-Linkages model, the market
costs include both direct and indirect market costs. For instance, a decrease in crop
yields will lead to a direct impact on agricultural output of the affected crops, but also
to indirect effects, including substitution by other crops and changes in trade patterns.

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Non-market impacts cannot be easily accounted for in a general equilibrium
framework as they are not linked to any specific variable in the production or utility
functions of the model. The welfare costs of non-market impacts are evaluated using
estimates of willingness-to-pay to reduce health risks obtained from results of existing
direct valuation studies.

The health burden of air pollution in India

Poor air quality has been one of the most severe environmental concerns in the urban
areas worldwide, particularly in developing countries. An assessment of health
damages from exposure to the high levels of particulates in 126 cities around the world
where the annual mean levels exceed 50 ug/m3 tells that such damages can amount to
a near 130,000 premature mortality. Over 500,000 fresh cases of chronic bronchitis
and many other lesser effects on health each year. In the aggregate terms, this
amounts to 2.8 million DALYs (Disability-adjusted life years) lost for this sample of
almost 300 million people or 9 DALYs lost per 1000 residents. Highly polluted mega-
cities of China and India account for 82 percent of these DALYs, and the low- and
middle-income nations together account for 98 percent of DALYs lost in this sample.
India, which is represented by 12 largest cities in the sample, ranks second behind
China, bearing 30 percent of the total DALYs lost, or 12 DALYs lost per 1000 inhabitants
of these cities. By comparison, exposure to particulate matter imposes the onus of 2
DALYs lost per 1000 residents in the cities from the high-income group of countries in
the sample, as well as a 3 DALYs lost per 1000 urban population for middle -income
nations. When denominated in monetary values and as a proportion of the respective
incomes (GDP/capita), health damages jump from 3 percent per sample average by as
much as 9 percent for India and 12 percent for China. In other words, expenses to the
society, part of which is direct efficiency loss, by air pollution in largest India cities is as
high as nearly one-tenth of the income generated in those cities from all economic
activities. Notwithstanding all the uncertainties around such estimates, this analysis
clearly shows that India suffers from a disproportionally heavy health burden of urban
air pollution by international comparison.

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Significance of health costs with respect to other damages due to
air emissions
Major source of urban air pollution is burning of fuels by power plants, the industry
boilers, residential stoves and vehicle engines. Besides imposing enormous burden of
ill-health, by-products of the fuel combustion cause a diverse range of non-health
damages that ranges from local effects on visibility and the buildings to long-range acid
depositions to greenhouse emissions that may alter global climate. Meanwhile, fuel
use provides vital energy sources and transport services, the demand for which should
be considered when designing policies and actions to fight adverse environmental
effects from usage of fuels.
The World Bank conducted a study that evaluated the magnitude of the different
damages in urban areas that could be attributed to different fuels, industries and
pollutants. Such damages dealt with in the study include: the harmful effects of
exposure to air pollution in the urban areas; local non-health consequences, i.e.
decrease in the visibility, soiling and other material damages; and global climate
change impacts. The analysis has been applied to six large cities in various parts of the
world afflicted by high levels of atmospheric pollution -- Bangkok, Krakow, Manila,
Mumbai, Santiago, and Shanghai. Such cities differ in geographic and climatic
conditions; demographics; fuel mix and consumption patterns; sectoral composition;
and income levels; and thus, together represent a span of different factors affecting
the magnitude of the environmental costs of various fuel uses. Therefore, the evidence
emerging from this exercise is likely to be representative of the typical situation in
many urban areas of developing countries. Societal costs of all environmental
consequences evaluated in the study reach US $ 3 billion, with the health
consequences being the largest part of the costs per city. Chart 1 illustrates shares of
the health, ‘local’ non-health, and climate change impacts for the sample of six cities.
Effects on climate change appear to be a significant portion of non-health costs but
they are less than half of health-care costs imposed by fuel combustion in urban areas.

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 28%

8% 64%

Health Costs Non - Health Costs Climate Change Costs

Chart 1 - The composition of environmental damages due to air emissions from fuel combustion in six cities.
Source: World Bank estimates. See Lvovsky, et al., forthcoming.
Given the fact that fuel combustion is not only one, even though major cause of the
high level of particulate matter in the cities (see Chart 2), the general health costs of
poor air quality will be even greater. The economic estimations of health losses are
based on certain procedural tools and are as plausible as those tools are. Following
two sections of the paper emphasize several methodological concerns expressed by
the valuing of the health effects of pollution. These problems naturally fall into two
categories: (a) the effective identification and valuation of health consequences; and
(b) estimating monetary values that apply to associated morbidity (illness) and death
rate.

Average

Mumbai

Shanghai

Manila

Bangkok

Krakow

Santiago
0 20 40 60 80 100 120 140 160

PM10 from other sources PM10 from fuel use

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 Chart 2 - Contribution of fuel use into the ambient levels of PM10.
Source: World Bank estimates. See Lvovsky, et al., forthcoming.

Health effects and the priorities for controlling pollution: a case of

Mumbai
to demonstrate how the assessment This section will discuss the findings of the
analysis for Mumbai with a specific objective of the health implications can be used to
set the pollution control priorities. As part of this study, a special model was developed
that links these effects to: (a) emissions from different economic sectors or sources,
and (b) fossil fuel consumption in each sector. The top five most damaging fuels -- coal,
fuel oil, diesel, gasoline, and wood -- were examined. This should be considered during
the discussion of outcomes for Mumbai that follows. The magnitude of the damage in
absolute values will be true solely to the extent to which the supposed impacts on
health and economic values correspond to Mumbai conditions. However, relative to
the priorities across pollutant sources do not depend upon such assumptions (they rely
on the validity of the standardized diffusion models and emissions inventory, but not
to the degree that may reverse the general conclusions). Overall annual health damage
from the combustion of various fuels in Mumbai amounted to US $ 150 million. Table 3
shows the portions of three key groups of combustion sources. In such damages:
vehicles; large power utilities and industries; and small boilers and stoves used by the
small-scale industries, commerce and householders, as well as the details the sectoral
composition of damages for specific health impacts.
Power plants & large Small
Table 3 - City: Mumbai All sources boilers boilers & stoves Vehicles
Cases:        
Premature death 2,140 175 1,442 523
Chronic bronchitis 7,796 637 5,255 1,905
Respiratory symptoms day 3,40,36,340 27,80,621 2,29,40,122 83,15,598
Restricted activity day 1,06,94,478 8,73,692 72,07,962 26,12,824
Social costs, '000 US $:        
Premature death 71,601 5,849 48,258 17,493
Chronic bronchitis 31,396 2,565 21,161 7,671
Respiratory symptoms 30,928 2,527 20,845 7,556
Restricted activity 11,706 956 7,889 2,860
Other effects 1,609 131 1,084 393
Total 1,47,240 12,028 99,237 35,973
per resident, US$/psn. 12 1 8 3
as a share of income, % 3% 0% 2% 1%

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 a share by source, % 100% 8% 68% 24%
Turning back into a question of what type of a dose-response association for a
mortality risk must be used for Mumbai. A meta-analytic estimate from the series of
PM10 studies in a different location or values from studies conducted in Delhi. It is
noted that health impacts in Table 3 only reflects an increase in the levels of PM10 (30
ug/m3 annual agglomeration-wide average) that are attributed to emissions from
combustion of various fuels. These were not impacts of total exposure to the ambient
levels of particulates which would have been greater. As both pollution mix from fuel
burning and the corresponding range of PM10 levels match very well in the situations
in developed countries where most dose-response studies have been undertaken, the
use of a meta-analytic estimate for the mortality effect is better justifiable. Combine
with DALY-adjusted VOSL should not bias the corresponding social costs.

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