their risk of death.It is not the value of any single person's life or death,nor does it represent a society's judgment as to what that value should be.The VSL is also not meant for cross-country comparisons as to the value of life and death in different countries.The WTP-based approach is best suited for analyses of economic welfare,and it has become the standard approach in high-income countries for valuing the mortality risks associated with pollution(see Viscusi 1993;Cropper 2000;OECD 2012). The income-based approach is more suited to financial analysis and measuring pollution costs within the extended boundaries of the national accounts-for example,as a component of the World Bank's adjusted net savings(ANS)measure.ANS,or"genuine savings,"is a measure of the change in the value of a nation's assets,including manufactured capital as well as natural and human capital(see Hamilton and Clemens 1999;World Bank 2005,2011).Positive sav- ings represents an investment in future well-being as a nation accumulates the assets needed to drive economic growth and at least sustain current levels of consumption.Within the ANS framework,premature mortality due to pollution represents a disinvestment in a nation's human capital stock.As with the degradation of other forms of capital,this disinvestment is valued according to the expected loss of income over the lifetime of the asset.The Ministry of Social Development in Chile,for example,has adopted this approach for valuing premature mortality (Chile MDS 2014). Key Findings In 2013 exposure to ambient and household air pollution cost the world's economy some $5.11 trillion in welfare losses.In terms of magnitude,welfare losses in South Asia and East Asia and the Pacific were the equivalent of 7.4 percent and 7.5 percent of the regional gross domestic product(GDP),respectively(figure ES.1).At the low end,losses were still equal to 2.2 percent of GDP in the Middle East and North Africa.Household air pollution from FIGURE ES.1 Welfare Losses Due to Air Pollution by Region,2013 8.0- 7.5 4 7.0 6.0 5.0 5.148 4.0 3.8 3.1 3.0 2.8 2.4 2.4 2.0 222.0 1.5 1.0 0.8 D.3 0.10.2 0.10.1 0.4 0.1 0 0.0 East Asia Europe Latin Middle North South Asia Sub-Saharan Pacific Central Asia America East America Africa Caribbean North Africa 圆Total air pollution ☐Ambient PM2s Household PM,s Ambient ozone Sources:World Bank and IHME. Note:Total air pollution damages include ambient PM,s,household PM,s,and ozone.GDP=gross domestic product. xii The Cost of Air Pollution:Strengthening the Economic Case for Action
xii The Cost of Air Pollution: Strengthening the Economic Case for Action their risk of death. It is not the value of any single person’s life or death, nor does it represent a society’s judgment as to what that value should be. The VSL is also not meant for cross-country comparisons as to the value of life and death in different countries. The WTP-based approach is best suited for analyses of economic welfare, and it has become the standard approach in high-income countries for valuing the mortality risks associated with pollution (see Viscusi 1993; Cropper 2000; OECD 2012). The income-based approach is more suited to financial analysis and measuring pollution costs within the extended boundaries of the national accounts—for example, as a component of the World Bank’s adjusted net savings (ANS) measure. ANS, or “genuine savings,” is a measure of the change in the value of a nation’s assets, including manufactured capital as well as natural and human capital (see Hamilton and Clemens 1999; World Bank 2005, 2011). Positive savings represents an investment in future well-being as a nation accumulates the assets needed to drive economic growth and at least sustain current levels of consumption. Within the ANS framework, premature mortality due to pollution represents a disinvestment in a nation’s human capital stock. As with the degradation of other forms of capital, this disinvestment is valued according to the expected loss of income over the lifetime of the asset. The Ministry of Social Development in Chile, for example, has adopted this approach for valuing premature mortality (Chile MDS 2014). Key Findings In 2013 exposure to ambient and household air pollution cost the world’s economy some $5.11 trillion in welfare losses. In terms of magnitude, welfare losses in South Asia and East Asia and the Pacific were the equivalent of 7.4 percent and 7.5 percent of the regional gross domestic product (GDP), respectively (figure ES.1).1 At the low end, losses were still equal to 2.2 percent of GDP in the Middle East and North Africa. Household air pollution from Figure ES.1 Welfare Losses Due to Air Pollution by Region, 2013 Percent of GDP equivalent East Asia & Pacific Europe & Central Asia Latin America & Caribbean Middle East & North Africa North America South Asia Sub-Saharan Africa 8.0 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 7.5 4.5 3.1 0.3 5.14.8 0.10.2 2.4 1.5 0.8 0.1 2.2 2.0 0.1 0.1 2.8 2.4 0.4 7.4 3.1 4.9 0.4 3.8 1.4 2.5 0.1 Total air pollution Ambient PM2.5 Household PM2.5 Ambient ozone Sources: World Bank and IHME. Note: Total air pollution damages include ambient PM2.5, household PM2.5, and ozone. GDP 5 gross domestic product. 1700234_Cost of Pollution.indd 12 8/29/16 2:51 PM
FIGURE ES.2 Welfare Losses from Ambient PM2.s and Household Air Pollution in Low-and Middle-Income Countries,1990-2013 1,800 1.600 -Household air pollution 1,400 Ambient PM2s 1,200 *suolll!q 1,000 '$sn 800 600 400 200 0 1990 1995 2000 2005 2010 2013 Sources:World Bank and IHME. cooking with solid fuels was the biggest cause of losses in South Asia and Sub-Saharan Africa. In all other regions,losses were largely caused by ambient air pollution from fine particulate matter(PM,).Labor income losses,while expectedly lower than welfare losses,were none- theless substantial in regions with younger populations.Lost income for countries in South Asia totaled more than $66 billion in 2013,the equivalent of nearly 1 percent of GDP.Globally, the labor income losses totaled $225 billion in 2013. Moreover,air pollution costs have grown since 1990.From 1990 to 2013,welfare losses nearly doubled and labor income losses increased by 40 percent,despite countries having made great gains in economic development and health outcomes(figure ES.2).In low-income countries, declines in death rates were more than offset by population growth and greater total exposure to polluted air.In middle-income countries,total exposure and health impacts also increased. However,most of the estimated increase in welfare losses stemmed from people placing a greater value on reducing fatality risks.Similarly,from 1990 to 2013 average wages increased in real terms in all but the high-income countries that are not members of the Organisation for Economic Co-operation and Development(OECD),causing forgone labor income losses per premature death to be higher.Across countries in all income groups,the age profile of people affected by pollution shifted,so that a higher proportion of deaths occurred among people later in their working life,having a countervailing,but not equal or greater,effect on income losses. Ambient air pollution is becoming a greater challenge,and household air pollution remains a persistent challenge despite some gains.Since the 1990s,exposure to ambient air pollution has grown in most countries(other than high-income),with some of the greatest increases in the heavily populated,fastest-growing regions,including South Asia and East Asia and the Pacific. By 2013 about 87 percent of the world's population was living in areas that exceeded the Air The Cost of Air Pollution:Strengthening the Economic Case for Action xiⅷi
The Cost of Air Pollution: Strengthening the Economic Case for Action xiii cooking with solid fuels was the biggest cause of losses in South Asia and Sub-Saharan Africa. In all other regions, losses were largely caused by ambient air pollution from fine particulate matter (PM2.5 ). Labor income losses, while expectedly lower than welfare losses, were nonetheless substantial in regions with younger populations. Lost income for countries in South Asia totaled more than $66 billion in 2013, the equivalent of nearly 1 percent of GDP. Globally, the labor income losses totaled $225 billion in 2013. Moreover, air pollution costs have grown since 1990. From 1990 to 2013, welfare losses nearly doubled and labor income losses increased by 40 percent, despite countries having made great gains in economic development and health outcomes (figure ES.2). In low-income countries, declines in death rates were more than offset by population growth and greater total exposure to polluted air. In middle-income countries, total exposure and health impacts also increased. However, most of the estimated increase in welfare losses stemmed from people placing a greater value on reducing fatality risks. Similarly, from 1990 to 2013 average wages increased in real terms in all but the high-income countries that are not members of the Organisation for Economic Co-operation and Development (OECD), causing forgone labor income losses per premature death to be higher. Across countries in all income groups, the age profile of people affected by pollution shifted, so that a higher proportion of deaths occurred among people later in their working life, having a countervailing, but not equal or greater, effect on income losses. Ambient air pollution is becoming a greater challenge, and household air pollution remains a persistent challenge despite some gains. Since the 1990s, exposure to ambient air pollution has grown in most countries (other than high-income), with some of the greatest increases in the heavily populated, fastest-growing regions, including South Asia and East Asia and the Pacific. By 2013 about 87 percent of the world’s population was living in areas that exceeded the Air Figure ES.2 Welfare Losses from Ambient PM2.5 and Household Air Pollution in Low- and Middle-Income Countries, 1990–2013 Welfare losses (2011 US$, billions, PPP-adjusted) 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 1990 1995 2000 2005 2010 2013 Household air pollution Ambient PM2.5 Sources: World Bank and IHME. 1700234_Cost of Pollution.indd 13 8/29/16 1:55 PM
Quality Guideline of the World Health Organization (WHO),which is an annual average of 10 micrograms per cubic meter(ug/m)PM,Although the age-standardized death rate due to ambient PM,exposure has decreased in most countries since 1990 because of overall improve- ments in health,population growth and increased exposure have nonetheless increased the number of premature deaths.From 1990 to 2013,premature mortality attributable to ambient PM increased by 30 percent,from 2.2 million deaths to 2.9 million deaths per year.Global welfare losses from exposure to ambient PM,s rose 63 percent over the same period,reaching $3.55 trillion-a reflection of worsening exposure in many fast-growing countries as well as the higher marginal costs for fatality risks associated with rising incomes.Labor income losses due to ambient PM,s climbed from $103 billion to $144 billion per year. Although two-fifths of the world's population was exposed to household air pollution from cooking with solid fuels in 2013,exposure has declined in most countries since 1990.Declines in exposure ranged from nearly 100 percent in many higher-income countries to under 10 per- cent across much of Sub-Saharan Africa.The age-standardized death rate from household air pollution decreased from 75 deaths per 100,000 persons in 1990 to 47 per 100,000 in 2013,a 38 percent drop.And yet,despite the reductions in exposure and death rates,the total number of deaths associated with indoor air pollution has mostly remained constant at about 2.9 mil- lion per year.Welfare losses due to household air pollution in low-and middle-income coun- tries in 2013 were on the order of $1.52 trillion,while labor income losses reached $94 billion. The very young and older adults remain particularly vulnerable:in 2013 about 5 percent of deaths of children under 5 and 10 percent of deaths among adults over 50 were attributed to air pollution,compared with less than 1 percent among young adults.This age pattern of mor- tality has remained unchanged since 1990.Among all ages and over time,a larger share of men than women have died prematurely from air pollution-based illnesses. Recommendations and Way Forward The fact that global welfare losses from fatal illness attributable to air pollution are in the tril- lions of dollars,is a call to action.The additional costs of pollution not captured by this report make reducing exposure all the more urgent for achieving the goals of shared,inclusive,and sustainable prosperity.Furthermore,the growing challenge of ambient air pollution and per- sistence of household air pollution impacts despite improvements in health services suggest that incremental progress to improve air quality will not be sufficient and that achieving real reductions in the cost of pollution will require more ambitious action. Meanwhile,by placing air pollution-related health risks in the context of other health risks that,unlike air pollution,are typically within the purview of health agencies,the Global Bur- den of Disease approach is emphasizing the need for health agencies to consider this impor- tant health burden and calling for ministries of environment and health to work together to deal with this challenge. xiv The Cost of Air Pollution:Strengthening the Economic Case for Action
xiv The Cost of Air Pollution: Strengthening the Economic Case for Action Quality Guideline of the World Health Organization (WHO), which is an annual average of 10 micrograms per cubic meter (µg/m3 ) PM2.5 . Although the age-standardized death rate due to ambient PM2.5 exposure has decreased in most countries since 1990 because of overall improvements in health, population growth and increased exposure have nonetheless increased the number of premature deaths. From 1990 to 2013, premature mortality attributable to ambient PM2.5 increased by 30 percent, from 2.2 million deaths to 2.9 million deaths per year. Global welfare losses from exposure to ambient PM2.5 rose 63 percent over the same period, reaching $3.55 trillion—a reflection of worsening exposure in many fast-growing countries as well as the higher marginal costs for fatality risks associated with rising incomes. Labor income losses due to ambient PM2.5 climbed from $103 billion to $144 billion per year. Although two-fifths of the world’s population was exposed to household air pollution from cooking with solid fuels in 2013, exposure has declined in most countries since 1990. Declines in exposure ranged from nearly 100 percent in many higher-income countries to under 10 percent across much of Sub-Saharan Africa. The age-standardized death rate from household air pollution decreased from 75 deaths per 100,000 persons in 1990 to 47 per 100,000 in 2013, a 38 percent drop. And yet, despite the reductions in exposure and death rates, the total number of deaths associated with indoor air pollution has mostly remained constant at about 2.9 million per year. Welfare losses due to household air pollution in low- and middle-income countries in 2013 were on the order of $1.52 trillion, while labor income losses reached $94 billion. The very young and older adults remain particularly vulnerable: in 2013 about 5 percent of deaths of children under 5 and 10 percent of deaths among adults over 50 were attributed to air pollution, compared with less than 1 percent among young adults. This age pattern of mortality has remained unchanged since 1990. Among all ages and over time, a larger share of men than women have died prematurely from air pollution–based illnesses. Recommendations and Way Forward The fact that global welfare losses from fatal illness attributable to air pollution are in the trillions of dollars, is a call to action. The additional costs of pollution not captured by this report make reducing exposure all the more urgent for achieving the goals of shared, inclusive, and sustainable prosperity. Furthermore, the growing challenge of ambient air pollution and persistence of household air pollution impacts despite improvements in health services suggest that incremental progress to improve air quality will not be sufficient and that achieving real reductions in the cost of pollution will require more ambitious action. Meanwhile, by placing air pollution–related health risks in the context of other health risks that, unlike air pollution, are typically within the purview of health agencies, the Global Burden of Disease approach is emphasizing the need for health agencies to consider this important health burden and calling for ministries of environment and health to work together to deal with this challenge. 1700234_Cost of Pollution.indd 14 8/29/16 1:55 PM
Notes 1.Here,welfare losses are expressed as a percentage of GDP equivalent only to provide a convenient sense of relative scale and not to suggest that welfare is a share of GDP or that the two are a measure of the same thing. References Brauer,Michael,Greg Freedman,Joseph Frostad,Aaron van Donkelaar,Randall V.Martin,Frank Den- tener,Rita van Dingenen et al.2016."Ambient Air Pollution Exposure Estimation for the Global Burden of Disease 2013."Environmental Science and Technology 50 (1):79-88.doi:10.1021/acs .est.5b03709. Chile MDS(Ministerio de Desarrollo Social,Chile).2014."Estimacion del valor de los costos sociales por fallecimiento prematuro en Chile"(Estimation of the Social Costs of Premature Mortality in Chile).Report by the Division of Social Evaluation of Investments,Sub-Secretary of Social Evalua- tion,Ministry of Social Development,Government of Chile,March. Cohen,Aaron,et al.n.d."The Global Burden of Disease Attributable to Ambient Air Pollution:Esti- mates of Current Burden and 23-Year Trends from the GBD 2013 Study."In submission. Cropper,Maureen.2000."Has Economic Research Answered the Needs of Environmental Policy?" Journal of Environmental Economics and Management 39 (3):328-50. GBD 2013 Collaborators,2015."Global,Regional,and National Comparative Risk Assessment of 79 Behavioural,Environmental and Occupational,and Metabolic Risks or Clusters of Risks in 188 Countries,1990-2013:A Systematic Analysis for the Global Burden of Disease Study 2013"The Lancet396(10010):2287-2323. Hamilton,Kirk,and Michael Clemens.1999."Genuine Savings Rates in Developing Countries."World Bank Economic Review 13 (2):333-56. OECD(Organisation for Economic Co-operation and Development).2012.Mortality Risk Valuation in Environment,Health,and Transport Policies.Paris:OECD. Viscusi,W.Kip.1993."The Value of Risks to Life and Health."Journal of Economic Literature 31: 1912-46. World Bank.2005.Where Is the Wealth of Nations?Measuring Capital for the 21st Century.Washington, DC:World Bank. 2011.The Changing Wealth of Nations:Measuring Sustainable Development for the New Millen- nium.Washington,DC:World Bank. The Cost of Air Pollution:Strengthening the Economic Case for Action XV
The Cost of Air Pollution: Strengthening the Economic Case for Action xv Notes 1. Here, welfare losses are expressed as a percentage of GDP equivalent only to provide a convenient sense of relative scale and not to suggest that welfare is a share of GDP or that the two are a measure of the same thing. References Brauer, Michael, Greg Freedman, Joseph Frostad, Aaron van Donkelaar, Randall V. Martin, Frank Dentener, Rita van Dingenen et al. 2016. “Ambient Air Pollution Exposure Estimation for the Global Burden of Disease 2013.” Environmental Science and Technology 50 (1): 79–88. doi:10.1021/acs .est.5b03709. Chile MDS (Ministerio de Desarrollo Social, Chile). 2014. “Estimación del valor de los costos sociales por fallecimiento prematuro en Chile” (Estimation of the Social Costs of Premature Mortality in Chile). Report by the Division of Social Evaluation of Investments, Sub-Secretary of Social Evaluation, Ministry of Social Development, Government of Chile, March. Cohen, Aaron, et al. n.d. “The Global Burden of Disease Attributable to Ambient Air Pollution: Estimates of Current Burden and 23-Year Trends from the GBD 2013 Study.” In submission. Cropper, Maureen. 2000. “Has Economic Research Answered the Needs of Environmental Policy?” Journal of Environmental Economics and Management 39 (3): 328–50. GBD 2013 Collaborators, 2015. “Global, Regional, and National Comparative Risk Assessment of 79 Behavioural, Environmental and Occupational, and Metabolic Risks or Clusters of Risks in 188 Countries, 1990–2013: A Systematic Analysis for the Global Burden of Disease Study 2013” The Lancet 396 (10010): 2287–2323. Hamilton, Kirk, and Michael Clemens. 1999. “Genuine Savings Rates in Developing Countries.” World Bank Economic Review 13 (2): 333–56. OECD (Organisation for Economic Co-operation and Development). 2012. Mortality Risk Valuation in Environment, Health, and Transport Policies. Paris: OECD. Viscusi, W. Kip. 1993. “The Value of Risks to Life and Health.” Journal of Economic Literature 31: 1912–46. World Bank. 2005. Where Is the Wealth of Nations? Measuring Capital for the 21st Century. Washington, DC: World Bank. ______. 2011. The Changing Wealth of Nations: Measuring Sustainable Development for the New Millennium. Washington, DC: World Bank. 1700234_Cost of Pollution.indd 15 8/31/16 3:37 PM
1.Introduction Air Pollution:A Threat to Sustainable Prosperity Air pollution'has emerged as one of the world's leading health risks.Each year,more than 5.5 million people around the world die prematurely from illnesses caused by breathing pol- luted air.Those illnesses include lung cancer,heart disease,stroke,acute respiratory infec- tions,and chronic obstructive pulmonary diseases such as bronchitis and emphysema(GBD 2013 Collaborators 2015).In fact,exposure to air pollution is now the fourth leading fatal health risk worldwide behind metabolic risks,dietary risks,and tobacco smoke(figure 1.1). More than six times as many people die from air pollution each year as from malaria,and more than four times as many die from air pollution as from HIV/AIDS. Air pollution takes many forms.One of the most damaging pollutants is PM,,which is very fine particulate matter(PM)with an aerodynamic diameter of less than 2.5 micrometers,or about one-thirtieth the width of a human hair.Because of their small size,these particles are capable of penetrating deep into the lungs.Their chemical makeup varies,depending on their source.They often consist of carbon,sulfate,and nitrate compounds,but also may include toxic substances such as heavy metals.Very fine particles may be emitted directly from com- bustion sources such as motor vehicles or power plants,or they may form when gases such as ammonium from fertilizers react with other pollutants in the atmosphere.They may also include concentrations of natural windblown dust. Air pollution is especially severe in some of the world's fastest-growing urban regions,where the combination of more people,more vehicles,energy derived from dirty fuels,construction, FIGURE 1.1 Percentage of Attributable Deaths by Risk Factor: Globally,2013 Metabolic risks 28.7 Dietary risks 20.5 Tobacco smoke 11.2 Air pollution 10.1 Alcohol and drug use 5.8 Low physical activity 4.0 Child and matemal malnutrition- 3.0 Unsafe sex 2.7 Unsafe water,sanitation,and hand washing 2.5 Lead exposure 1.6 Occupational risks 1.3 Sexual abuse and violence 0.5 Residential radon -0.2 0 5 10152025 30 35 %of attributable deaths Sources:World Bank and IHME,using data from IHME,GBD 2013 The Cost of Air Pollution:Strengthening the Economic Case for Action 1
The Cost of Air Pollution: Strengthening the Economic Case for Action 1 1. Introduction Air Pollution: A Threat to Sustainable Prosperity Air pollution1 has emerged as one of the world’s leading health risks. Each year, more than 5.5 million people around the world die prematurely from illnesses caused by breathing polluted air. Those illnesses include lung cancer, heart disease, stroke, acute respiratory infections, and chronic obstructive pulmonary diseases such as bronchitis and emphysema (GBD 2013 Collaborators 2015). In fact, exposure to air pollution is now the fourth leading fatal health risk worldwide behind metabolic risks, dietary risks, and tobacco smoke (figure 1.1). More than six times as many people die from air pollution each year as from malaria, and more than four times as many die from air pollution as from HIV/AIDS. Air pollution takes many forms. One of the most damaging pollutants is PM2.5 , which is very fine particulate matter (PM) with an aerodynamic diameter of less than 2.5 micrometers, or about one-thirtieth the width of a human hair. Because of their small size, these particles are capable of penetrating deep into the lungs. Their chemical makeup varies, depending on their source. They often consist of carbon, sulfate, and nitrate compounds, but also may include toxic substances such as heavy metals. Very fine particles may be emitted directly from combustion sources such as motor vehicles or power plants, or they may form when gases such as ammonium from fertilizers react with other pollutants in the atmosphere. They may also include concentrations of natural windblown dust. Air pollution is especially severe in some of the world’s fastest-growing urban regions, where the combination of more people, more vehicles, energy derived from dirty fuels, construction, Figure 1.1 Percentage of Attributable Deaths by Risk Factor: Globally, 2013 Metabolic risks Dietary risks Tobacco smoke Air pollution Alcohol and drug use Low physical activity Child and maternal malnutrition Unsafe sex Unsafe water, sanitation, and hand washing Lead exposure Occupational risks Sexual abuse and violence Residential radon 28.7 20.5 11.2 10.1 5.8 4.0 3.0 2.7 2.5 1.6 1.3 0.5 0.2 % of attributable deaths 0 5 10 15 20 25 30 35 Sources: World Bank and IHME, using data from IHME, GBD 2013. 1700234_Cost of Pollution.indd 1 8/29/16 1:55 PM