How India’s air pollution crisis hurts industry1 min read . Updated: 20 Nov 2018, 11:55 AM IST
The effects of pollution and other environmental changes can vary by industry, income and location
New Delhi: India’s air pollution crisis puts the health of millions at risk. And while the extent of these health costs is well-documented, the economic costs are less clear.
For instance, some industries might benefit from generating pollution but others might be hurt by employing sicker workers who are less productive. In a new paper presented at the North East Universities Development Consortium, Jamie Hansen-Lewis of Brown University quantifies the effect of India’s air pollution on productivity.
Combining data between 2000 and 2010 from the Annual Survey of Industries with satellite and weather data, she finds that air pollution has little effect on productivity overall but there is significant variation among industries.
She shows that pollution has a negative effect in industries accounting for 61% of India’s output with some industries particularly sensitive to pollution. These industries employ more labour intensive technology and, consequently, are hurt more by workers’ exposure to pollution.
To further quantify the cost of pollution, Hansen-Lewis models the impact of reducing India’s air pollution to international standards. Bringing India’s air to global standards would lead to a small increase in profits of 0.3% across manufacturing firms.
However, among the more sensitive industries, the impact would be more pronounced, with profits increasing by 1.1%.
She concludes that the effects of annual changes in pollution are notably weaker than the effects of day-to-day changes in pollution, implying that short-term changes generate higher economic costs. She also stresses air pollution’s diverse impact.
The effects of pollution and other environmental changes can vary by industry, income and location.