Air Pollution: The silent killer afflicting ASEAN’s economy

Southeast Asia has long payed a high price in human welfare due to some of the world’s worst air pollution. Now one study calculates the huge economic cost of failing to improve air quality.

Air pollution is a global health concern and the fourth highest risk factor for premature mortality worldwide. ASEAN countries are highly impacted by poor air quality, with over 85% of the population exposed to concentration of fine particulate matter pollution (PM_2.5) higher than those recommended by the World Health Organization for the protection of human health. This exposure to PM_2.5 is linked to increased risk of developing potentially fatal diseases such as stroke, diabetes, lung cancer, chronic obstructive pulmonary disease, ischemic heart disease and lower respiratory infections, while also increasing the risk of developing non-fatal health outcomes such as the development of asthma and autism spectral disorders in children, as well as dementia in the elderly. While reducing exposure to air pollution relates directly to the United Nations Sustainable Development Goals, especially “SDG 3: Good Health and Wellbeing”, actions addressing air quality will have multiple other benefits.

Beyond the direct impacts of exposure on health, including their economic costs, poor air quality can have negative impacts on people’s wellbeing, for example by limiting the time that they can spend outdoors or performing physical activity. It can also have direct negative economic consequences, through negatively impacting tourism, disrupting flight patterns and reducing the economic viability of cities, making a city less attractive as a workplace to highly skilled workers or international business enterprises.

The ASEAN region has one of the fastest growing economies in the world. Strong economic development is often associated with negative environmental impacts including increased emissions of air pollutants and greenhouse gases. Several ASEAN countries have recognized air pollution as an issue and have implemented policies to improve air quality resulting in reduced growth of emissions in recent decades. This has occurred alongside economic development and, therefore, indicates gradual decoupling of economic growth from air pollution. However, despite some success, these policies do not go far enough. A recent analysis, supported by the United Nations Environment Programme (UNEP), highlighted that without additional action, air quality in many regions will worsen, and the number of people exposed to unhealthy levels of air pollution will increase. This will have negative impacts for the health and wellbeing of the population of ASEAN countries, limiting countries abilities to achieve the sustainable development goals, with multiple economic consequences.

Solutions for improving air quality in the ASEAN region already exist (Figure 1) and if implemented could result in millions more people breathing clean air by 2030. Implementing these solutions would also have multiple other benefits including mitigating climate change and helping countries to achieve the sustainable development goals. Despite this, progress in the region is slow and significant coordination, capacity and financing barriers have thus far limited or delayed ambitious action from being taken. The implementation of policies can be considered costly by governments especially when there are several other developmental, societal, and economic issues which need to be addressed.

Figure 1: 12 key solutions identified which if implemented could reduce population exposure to fine particulate matter in ASEAN

However, not dealing with issues such as air pollution and climate change also come with significant economic costs. In the case of air pollution, for example, there are multiple negative economic costs associated with poor air quality. These include the economic costs of someone dying prematurely or developing an illness, such as healthcare bills and lost days of work, among others. Poor air quality also can impact tourism and make cities less economically attractive to highly skilled workers or businesses.

There are other benefits from taking action to curb air pollution and fossil fuel emissions. Increasing access to electrified public transport and reducing the number of private vehicles on roads would reduce traffic congestion and, potentially, road traffic fatalities.

Not implementing such policies will add to the air-quality-related economic costs. To assess the costs of doing nothing or little beyond current commitments, we have employed a concept of ‘cost of inaction’ to evaluate and compare the cost associated with no policy change versus a future where all identified mitigation potential is applied.

This concept is becoming an increasingly popular way to communicate the importance of action on environmental issues and a way to motivate policy makers or governments towards more ambitious action. It can spur competition between countries that can anticipate tangible gains by attracting international business headquarters and foreign direct investment.

An initial cost of inaction assessment for air pollution in Cambodia, Indonesia and Thailand carried out by the International Institute of Applied Systems Analysis (IIASA), as part of a UNEP project, showed that not implementing ambitious air quality policies in each country could lead to large economic consequences by 2030. In these three countries, exposure to air pollution was estimated to result in around 5,000, 216,000 and 24,000 premature deaths in each country by 2030 respectively. These mortality costs as well as the economic costs related to certain morbidity endpoints (hospital admissions, emergency room visits and workdays lost due to respiratory restricted activity) were estimated to cost Cambodia US$ 1.2 billion, Indonesia US$ 43.2 billion and Thailand US$ 18.3 billion in 2030.

Taking rapid ambitious action across multiple sectors such as expanding access to clean cooking, improving efficiency and enhancing emission controls in the industrial and power sectors, expanding renewable energy production, implementing smart agriculture measures, better waste management and higher emission controls for transport could significantly improve air quality with multiple benefits for human health and the economies of the three ASEAN countries. This initial assessment found that implementing all 12 solutions highlighted in the diagram below could save Cambodia US$ 0.8 billion, Indonesia US$ 27 billion, and Thailand US$ 13 billion per year compared to implementing current policies only. These savings, or costs of inaction, are equivalent to between 1.6% and 2.1% of each country’s GDP by 2030 and only account for the health costs of air pollution exposure. If we were to include the multiple other costs of air pollution, this figure would be much higher. This initial study shows that rapid action on air pollution in ASEAN needs to be taken to protect the health of the populations of ASEAN countries but also to ensure continued economic and sustainable development is achieved in the region.

Zbigniew Klimont currently leads the Pollution Management Research Group in the Energy, Climate, and Environment Program of the International Institute of Applied Systems Analysis. 

Jessica Slater is Research Scholar Pollution Management Research Group Energy, Climate, and Environment Program.