Pollution as Growth Killer

India’s Outlook Business has an excellent issue focusing on pollution not just as a people killer but as a growth killer (as I have emphasized pollution reduces wealth and health, see especially this video).

I am interviewed; here is one bit:

Q. Doesn’t the demographic dividend argue for growth first?

The demographic dividend is people. If you poison the people, you shrink the dividend. A young workforce with lower cognitive scores, more respiratory illness and shorter working lives is a smaller asset than the headcount suggests, and the damage to today’s children shows up as lower productivity in future decades.

The premise also assumes that India’s pollution is a byproduct of economic growth. Much of it isn’t. Farmers burning rice stubble in Punjab and Haryana produce more smoke than GDP. Burning garbage, road dust and old coal plants running without scrubbers are not engines of the economy. Families cooking with wood and dung are polluting because they are poor. Cleaning up these sources costs very little output, and some of the fixes would raise it.

Bad air is a tax on talent. And not just Indian talent. Who wants to visit Delhi in November? Foreign skilled professionals, firms and tourists all have options. Clear skies are a selling point for incredible India.

See also Anumita Roychowdhury, executive director of research and advocacy at the Centre for Science and Environment, who argues:

The evidence increasingly shows that air pollution is imposing significant economic and health costs on India. Several studies from credible institutions have estimated the scale of these losses.

For instance, a Lancet study estimated that air pollution was costing India roughly 9.5% of its GDP. The World Bank has put the figure at around 6% of GDP, while a Dalberg [a consultancy] study highlighted substantial losses to Indian businesses, estimating the costs at around 3% of GDP.

The economic impact is visible in several ways. When people fall ill, there is a significant loss of productivity. We have also seen reports of reduced consumer footfall during periods of severe pollution in Delhi. There are also concerns about people shifting their base and businesses, raising questions about operating in highly polluted locations such as Delhi.

So, the evidence increasingly suggests that pollution is under-mining economic activity. We may talk about economic growth, but if a significant part of that growth is being eroded by pollution-related health and productivity losses, the gains are not being fully realised.