In current news, we are often subject to warnings or rebuttals against the implications of climate change. Rather than analyzing climate change as a whole, we decided to focus on the effects of pollution on productivity. Even though pollution seems like an inevitable externality of our current economy, the losses from pollution affect everyone both through aesthetic and out-of-pocket costs. No longer are we focused mainly on environmental effects such as destruction to nature, but we also consider losses to income and companies in terms of productivity. Living with low air quality means having to spend money on health costs or even air masks in parts of the world. Worsened health means absence from work and can even lower incomes according to the World Bank. They found that deaths from air pollution cost the global economy around $225 billion in 2013 due to loss of labor and economic development.
The Organization for Economic Co-operation and Development (OECD) has also projected the effects of pollution on three key areas: agriculture, health expenditures, and labor productivity. The graph below shows the impacts relative to GDP; they use the red line to highlight the global annual market cost due to air pollution.
Although the economic effects are spread out globally, individual countries are affected disproportionately due to differences in population growth and economic development. Certain developing countries emit more pollution to catch up to developed countries. This creates negative environmental effects that need to be paid for later on.
The Environmental Kuznets Curve
The Environmental Kuznets Curve (EKC) is a graph that shows the level of environmental degradation with respect to GDP growth. The Environmental Kuznets Curve is a graph showing that an initial economic development will lead to a deterioration in the environment, but when GDP reaches a certain level, society begins to improve its relationship with the environment and the level of environmental degradation decreases. This means that developing countries tend to ignore environmental health in favor of economic gain and they tend to care less about pollutions until they reached a certain level of economic development. The graph below shows how pollution affects GDP through a variety of costs.
Do you think the EKC is valid in that we should worry about the effects of pollution later? Would you agree that a country has to experience a period of high pollution before becoming a strong economy? How can countries successfully combat the effects of pollution without hurting economic growth?
Ruinan Liu and Abby Yu