Economy and Air Pollution

Environmental economics is one of the most important subjects of study in economics and sustainable development. Economists across the world agree that there is a direct relationship between economic development and the environment. It is noted that economic activities have the largest impact on the environment and vice versa. For instance, when people make decisions to invest, they have to consider the environmental impact of their activities on the environment.

Within this general subject, there is another subject known as externalities, which is basically the idea that one actor's activities may have a negative impact on a person. Humans are social beings who cannot exist without interacting with others. The economic behavior theory is one of the best models used to explain how human beings decide and why they make them. They are rational decision-makers who will choose what makes them happier and do away with anything that risks a loss for them.

This happens most when making economic decisions. Both firms and households are often faced with these decisions, among them what to consume, when to invest, when to save, and what to invest their money in. These decisions make up market economies, which are the interaction between production and consumption.

The issue of environmental concerns comes when looking at the impacts of economic activities on these the environment. It involves the issues of scarcity as well, where human needs are unlimited, yet expected to be fulfilled through the limited natural resources.

Sometimes, one party's decisions may affect a third party who has no knowledge or consent to these activities. And since resources are scarce, there is a need to share them in a manner that benefits everyone. Externalities exist in this situation where the cost imposed on a third party does not have anything to do with the activities that caused it.

Pollution is the best example of externalities. Consider, for instance, a company that chooses to invest in the industrial field, whose process involves the production of toxic fumes and other waste products. When such fumes mix with the air we breathe, people start getting stick, forcing them to incur huge costs in terms of seeking medical attention. Pollution comes out in many forms, all from human activities. The emission of fossil fuel gasses is perhaps the largest form of pollution. Those who suffer the biggest risks may not even have anything to do with what may be happening at any given moment.

When people smoke cigarettes, they affect those who may not even know anything about smoking. The smoke mixes with clean air, which may cause serious issues to the society. This is why most regions have come up with smoking zones attempting to control the pollution.

Air pollution

Our main focus in this course here is air pollution. This is because air pollution is one of the most serious risks to our environment. In the most recent study by the Global Burden Disease (GBD), it is estimated that air pollution, both indoor and outdoor, caused 5.5 million premature deaths across the world in 2013. Air pollution does not only risk the environment; it also has extensive consequences on human health, causing particularly respiratory and cardiovascular diseases. As if that is not enough, it causes a decrease in crop yield and the environment. Its impacts on biodiversity and ecosystems are far-reaching. Note that indoor pollution causes the largest number of premature deaths, but outdoor air pollution is more lethal since it takes up a large space.

As stated above, human activities are the number cause of air pollution. When people behave or make a decision without caring about the environment, they risk it facing serious issues. We are already facing scarcity in terms of other natural resources like water, land, mineral, and oil. When unclean air comes into place, it makes things even worse.

Different studies have been carried to discover the extent of air pollution to the environment as well as to the economies. Findings record that it has already affected human health, agriculture, and leads to a wide range of other impacts. And these impacts are projected to get even worse in the next few decades. This pollution is major fueled by the lack of addition and more stringent policies to restrict natural resources abuse. An increase in population to the extent that the limited resources cannot be handled is another cause. When there are many people living in one area, they lead to increased economic activities, which impacts the general environment.

Another major cause of environmental issues through air pollution is that different studies report energy demand, which will lead to increased air pollutant emissions. There is a clear rise in the emissions of air pollutants, which is projected to increase particulate matter (PM) concentration and ground-level zone. Today, the concentration of particulate matter and ozone is already way beyond the normal, and they are expected to worsen over the years. The World Health Organization has been making different approaches to curbing the extent of air pollution. They have provided Air quality guidelines, which reveal that the high levels of PM2.5 are a threat to human life.

Economic growth and development are important because it leads to a better lifestyle and happiness. When people are living in a region with a stable population, they are said to live a happier life than those who live in less developed nations. Unfortunately, economic development sacrifices the environment. Economists, policymakers, and other observers have established that the only way to protect the environment truly is by ceasing economic development, something that cannot happen, especially with the current market economies. Air pollution major began with industrialization and technological advancement, where toxic emissions are released into the environment. And now the rising emissions of air pollutants, which increase particulate matter concentration and ozone, are imposing serious effects on the economy. Reports and findings indicate that healthcare costs related to the pollution-related cause will greatly increase over the next few years. A report by OECD indicates that by 2060, the annual number of working days, which impact labor productivity, will have reached 3.7 billion in terms of loss. Today this figure is already at 1.2 billion on a global level. Economic theory indicates that output, maximum profitability, and the general growth of an economy depends on how much work is done per given period. If people keep losing working days because of health issues caused by air pollution, it becomes a big threat and concern to the economy and sustainable development.

Impacts of air pollution on health and agricultural productivity

Air pollution has always been one of the major concerns for environmentalists and economists. These concerns extend to the whole world as they are said to cause the largest number of premature deaths. Reports have indicated that the number of premature deaths is project projected to increase significantly in the next few decades. By 2010, the global figure I was at around 3 million people dying per year, which is estimated to increase to 9 million people by 2016. It is not only an increase in the level of PM2.5 and ozone that cause these issues. Other factors an increasing and aging population as well as urbanization.

When people die prematurely due to health complications caused by air pollution, a single person may not sense, but the figures are distributed prematurely across the world, creating a larger figure that can be observed. It is reported that the largest number of deaths occur in non-OECD economies and most in China and India. These are regions that are expected to have the largest number of premature deaths by 2060. A smaller increase may be seen in other regions, but they are not considered too severe; hence, they do not feature in many studies.

If the current increase in PM2.5 and ozone continue on the upward trend, we are going to see an increase in the number of illness cases. This will mean more hospital admissions will be required, more healthcare expenditure, and sick or restricted activity days. This will have a huge impact on productivity. In many markets, any lost minute counts for a lot of losses, which developing economies cannot afford. Over the past few years, there has been an increase in bronchitis cases, which is expected to surge even further according to ages. Children are affected by asthma, which increases the number of asthma sicknesses and symptoms in children aged between 5 and 9 years. There are more hospital admissions today more than ever.

We already mentioned above that human beings are rational decision-makers who make choices based on what benefits them the most. Their main goal in life is to gain happiness. A good life is defined by having material possessions, and most importantly, good health. This means anyone who is constantly in and out of the hospital cannot enjoy the luxury of living a fulfilling life. Besides, we work so that we can have a good life. But hefty hospital bill can deprive us of that happiness. Of course, there are insurance covers, which may be some shield against such financial constraints, but the covers are barely enough to cover outpatient services. Due to scarcity, many people do not earn enough to enable them to live to maximum benefits. Apart from increased cases of illnesses, there is also an impact on normal work activities. A person who is sick may not be able to perform their duties effectively. This further decreases their chances of making good money.

It is not only people who are affected by these issues. Increased levels of pollutants, and especially ozone, reduce crop yield, which affects agricultural productivity. The TM5-FASST calculation, and many other kinds of literature, crop yield is going to face a negative impact across all regions. There will be a significant difference between regions according to the level of pollution, but every part of the world will feel the pinch of air pollution. In many areas, the most affected are wheat and oilseeds, more than crops. We have already seen in the past how pests affect crops, especially seeds. Today it is the increase in air pollutants that impact the biggest threat. Many people are already facing problems brought by refined foods. Fresh farm produce has been the main source of nutrients required to restore human health and make people enjoy long lives. But if agricultural productivity is affected in this manner, it means even people who depend on these foods are greatly affected. Also, the quality of agricultural produces on the market has reduced significantly. If there are no good seeds, even the crops they yield will not have the required quality standards.

Air Pollution Effects on the General Economy

Companies need workers to achieve their production goals. The projected increase in the levels of PM2.5 and ozone will continue leading to higher cases of illnesses. The three main impacts of this trend are reduced labor productivity, increase health expenditure, and crop yield losses. The labor market is the largest market for economic development. Households are the producers on the labor market, while firms offer the demand. In this case, employers look for certain features when adding employees to their list, among them the level of education and experience skills, and health/age. When workers get sick at all times, they reduce working hours, which reduces productivity.

If someone spends most of their earnings on hospital bills, they do not live a happy life, which further means they cannot work effectively. The factor mentioned above all contributes to a projection of GDP, which is below the projection. The consequences of labor productivity and health expenditure keep increasing significantly relative to GDP. The labor market is the largest contributor to the general economy. It is often said that a healthy nation is a working nation. But when issues like the consequences of the air population start to affect the quality of life, it becomes very hard for an economy to grow. The good news is, governments are coming up with different policies to reduce air pollution.

Author: James Hamilton