The Economic Benefits of Air Quality Improvements in Arctic Council Countries

6. Overall benefits of air pollution policies

Abstract

This final chapter first briefly summarises the benefits of air pollution policies quantified in the modelling analysis and outlined in previous chapters. The chapter then highlights the additional benefits from reducing air pollution that could not be accounted for in the quantitative scenario analysis. It includes an overview of the climate benefits from reduced emissions of short-lived climate pollutants. These additional benefits strengthen the call for policy action on air pollution.

6.1. Benefits of air pollution policies quantified in the modelling analysis

The quantitative scenario analysis presented in previous chapters of this report has highlighted the potential environmental, health and economic benefits of policy action to improve air quality in Arctic Council countries.

More ambitious air pollution policies are projected to result in emission reductions that lead to substantial air quality improvements. With lower exposure to air pollution, air pollution-related health impacts would also decrease. In particular, air pollution-related deaths would decrease. While the net macroeconomic effects are close to zero, the welfare improvements from reduced mortality and morbidity are high.

Inevitably, the results in the modelling analysis are subject to uncertainties concerning the economic projections, the estimations of emission projections and of concentrations of air pollution, the quantification of the biophysical impacts of air pollution, and the evaluation of the economic consequences. While changes to the modelling framework and key parameters would lead to changes in the numerical results, they would not affect the overall conclusions and policy messages that show the beneficial effects of air pollution policies (OECD, 2016[1]).

6.2. Additional benefits of air pollution policies

There are many additional benefits from reducing air pollution that could not be included in the analysis due to lack of data. These add to the rationale for policy action on air pollution. For example, besides the numerous health impacts of PM_2.5 and ground-level ozone discussed in this report, air pollution can also have other impacts on health, affecting fertility (Nieuwenhuijsen et al., 2014[2]), cognitive abilities in children (Sunyer et al., 2015[3]; Allen et al., 2017[4]; Basner et al., 2014[5]) and low weight at birth (Wang et al., 1997[6]). The latter two impacts are particularly important as they can have long-term effects on children’s school outcomes (Zhang, Chen and Zhang, 2018[7]), education levels and therefore earnings, with long-term implications for human capital.

Additionally, SO₂ and NO_x have direct impacts on health, leading to respiratory symptoms such as increased bronchitis symptoms in children with asthma (WHO, 2013[8]; Walton et al., 2015[9]), as well as increased mortality (RCP, 2016[10]).

Similarly, the use of fertilisers in agriculture leads to negative local environmental impacts, including water and soil pollution. Reducing fertilisers would imply healthier ecosystems, greater food quality and lower health risks.

Additional health benefits can occur specifically in urban areas when traffic circulation is limited to tackle air pollution emissions. These include reduced noise and traffic congestion, which can both affect health. Transport-related air pollution policies can also encourage people to be more active, with further potential health benefits (OECD, 2019[11]).

Finally, exposure to air pollution can also exacerbate the consequences of diseases that affect the respiratory system, such as COVID-19 (Wu et al., 2020[12]). Health damage resulting from long-term exposure to air pollution can diminish the body’s ability to fend off respiratory infections. Research found that a person living for decades in areas in the US with high levels of fine particulate matter is 15% more likely to die from COVID-19 than someone in a region with one unit less of the fine particulate pollution (Wu et al., 2020[12]).

There are also additional economic benefits from better air quality beyond those from improved health and agricultural productivity. High concentrations of air pollution can damage buildings and cultural heritage (Screpanti and De Marco, 2009[13]), decrease visibility, and reduce tourism (Dong, Xu and Wong, 2019[14]). Furthermore, air pollution can have negative impacts on biodiversity, forests and ecosystems (UNEP, 2010[15]). These impacts are likely to generate significant value losses, additional expenditures and an overall disutility, affecting human activity and economy.

Finally, while this report focuses on the macroeconomic effects and welfare improvements, improved air quality can also have beneficial effects on well-being. A recent OECD report highlights the potential benefits of environmental policies on well-being, including quality of life improvements from improved air quality (OECD, 2019[11]).

6.3. Climate benefits from reducing emissions of short-lived climate pollutants

Short-lived climate pollutants (SLCPs) have a warming impact on the climate and include black carbon, methane, ground-level ozone, and hydrofluorocarbons. Reducing SLCP emissions could help preserve the local Arctic climate and prevent some global impacts of climate change, including a rise in sea levels, changes in weather patterns, and loss of fish stocks.1 Although these climate benefits are not included in this report, they add weight to the economic case for increased policy action on air pollution, including SLCPs, in Arctic Council countries.

According to O’Garra (2017[16]), Arctic ecosystems provide value to society equivalent to about USD 287 billion per year2 in food supply, mineral extraction, oil production, tourism and leisure, as well as climate regulation services. Many of these services could be lost due to a rapidly changing climate. For example, changes to the local Arctic climate can have severe repercussions for Arctic wildlife and communities, which are highly dependent on natural resources. The thinning of sea ice and the lengthening melt season have made it hard for Northern local communities to obtain wild sources of food.

Reducing SLCP emissions, and the resulting climate impacts, could mitigate the potential release and transport of persistent organic pollutants (POPs), such as organochlorine pesticides, industrial chemicals and dioxins, and mercury, to the Arctic environment. Rising temperatures could result in the release of deposits of POPs and increase the potential for the long-range transport of POPs in gaseous form or alongside aerosol particles such as black carbon (Ma, Hung and Macdonald, 2016[17]). Two recent reports from the Arctic Monitoring and Assessment Programme (AMAP) show the negative impact of POPs on the Arctic environment (AMAP, 2016[18]; Science for Environment Policy, 2017[19]; AMAP/UN Environment, 2019[20]). These include high dietary exposure to mercury and other POPs through the accumulation of these two elements in fresh water fish and large mammals. These especially affect the Arctic’s indigenous population, who consume these animals more than people in urban areas. Despite decreasing in previous decades, the levels of POPs in indigenous people’s blood are still high enough to cause neurological and cardiovascular damage (AMAP, 2016[21]).

Thawing permafrost can lead to releases of carbon dioxide and methane that would aggravate climate change and result in high economic costs (Hope and Schaefer, 2015[22]). There are a large number of natural methane and organic carbon deposits in the Arctic, on the seabed, and in soils and lake sediments. The contribution of short-lived climate pollutants to climate change can create conditions suitable for the decomposition of the organic material in these reservoirs, which can release methane, with further warming effects on the climate (AMAP, 2015[23]).

Slowing down global warming in Arctic Council countries might also limit climate impacts that would otherwise lead to increases in specific emission sources. For example, climate change can result in increased incidence of forest fires, due to ice and snow melting and higher temperatures (Kim et al., 2020[24]). Similarly, as Arctic sea ice recedes, shipping activities might also increase (ITF, 2018[25]; AMAP, 2015[26]), resulting in higher emissions. In turn, forest fires and shipping contribute to air pollution and short-lived climate pollutants emissions, thus leading to a vicious cycle that aggravates the climate crisis.

Finally, the Arctic hosts multiple climate tipping points3 that could be triggered by changes in the local climate. The Arctic sea-ice loss amplifies global warming caused by the surface albedo impacts (Yumashev et al., 2019[27]) and the Greenland Ice Sheet disintegration may lead to global sea level rise of up to 7 metres (Dowdeswell, 2006[28]). These ice-loss events could trigger other climate tipping points, such as the slowdown of the Atlantic Meridional Overturning Circulation (AMOC) that could change weather patterns in Europe (Jackson et al., 2015[29]) and permafrost thawing that could release large amounts of carbon dioxide and natural methane deposits, further enhancing global warming (AMAP, 2015[23]; Gasser et al., 2018[30]).

6.4. A call for policy action on air pollution

To conclude, despite uncertainties about the exact figures presented in this report, there are clear environmental, health and welfare benefits in scaling up commitments to reduce air pollution in Arctic Council countries. Furthermore, climate change and socio-economic developments might exacerbate future environmental impacts of air pollution. This risk should encourage countries to put in place policy action to reduce air pollution.

Policy action on air pollution requires an all-encompassing approach that considers all emission sources. Policy options include incentivising or requiring the adoption of cleaner technologies, implementing air quality standards, automobile emission standards, fuel quality standards, and emission taxes, among others. Urban policies leading to reduced traffic would also imply lower non-exhaust emissions from cars (OECD, 2020[31]).

Policy action on air pollution can also benefit from interactions with other policy domains. Reducing air pollution though the deployment of the best available techniques provides an opportunity to reap synergies with investments in green growth and promoting innovation. As highlighted in Chapter 5 and Section 6.3, there are strong interactions between air pollution and climate change (Lanzi and Dellink, 2019[32]). Integrated policies that consider trade-offs and co-benefits for policy objectives on climate change, energy and air pollution are needed. Stimulating energy efficiency is the typical example of an integrated policy response that has multiple benefits (IEA, 2014[33]).

While this report focuses specifically on Arctic Council countries and their key role in contributing to preserving the Arctic environment, additional policy action on air pollution will be beneficial to most countries and could contribute to slowing down global warming through a substantial reduction of short-lived climate pollutants.

The current momentum for building back better after the COVD-19 pandemic and for a low-carbon transition creates opportunities for governments to also improve air quality, health and make progress towards sustainable development goals. Leveraging this momentum will help to establish a more central role for air quality policies, which can contribute to improving both human health and the environment.

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Notes

← 1.  See for example results on historical ocean’s warming on marine fisheries production (Free et al., 2019[35])

← 2.  The original figure reported in O’Garra (2017[16]) is USD 281 billion per year (in 2016 USD PPP). It has been converted to 2017 USD PPP for comparability with other estimates in this report.

← 3.  The IPCC defines a tipping point as a critical threshold at which global or regional climate changes from one stable state to another stable state, usually in a non-linear and often irreversible way (IPCC, 2019[34]).