Pollution damages ecosystems and human infrastructure, both of which result in significant economic costs. It also seriously impacts human health. According to the World Health Organization (WHO), air pollution kills over 7 million people each year—more than malaria and HIV combined. Of those, less than half of the fatalities result from outdoor pollution, primarily in cities, and the remainder result from indoor air pollution due to, for example, the fumes of wood and coal burned for heat and cooking. Many people are exposed to both sources of pollution.

Pollution is not something that only happens outside. Less air exchange indoors allows a variety of pollutants to build up inside buildings, potentially rising to unhealthy concentrations. The indoor pollutants of concern include VOCs, carbon monoxide (CO), radon, asbestos, and tobacco smoke (Figure 13.15). Sick building syndrome is a circumstance in which many building occupants experience symptoms of illness, such as headaches, respiratory and eye irritation, and nausea, for which no specific cause has been identified. Sick building syndrome has been frequently observed in new buildings in which many of the recently constructed components are still releasing significant amounts of VOCs from adhesives, plastics, and other materials.

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Indoor air pollution is especially severe in developing countries. Nearly 3 billion people in developing countries rely on open fires or inefficient stoves, where they burn biomass, animal dung, or coal indoors. The resulting indoor air pollution takes a tremendous health toll. The WHO estimates that in 2012 alone, over 4 million people exposed to indoor air pollution, primarily in low- and middle-income countries, died prematurely as a result of various ailments, including lung cancer, pneumonia, and stroke (Figure 13.16).

The damage caused by air pollution, including ill health and shortened lives, comes with real economic costs. These costs can be estimated in terms of deterioration of infrastructure, such as buildings and bridges, reduced agricultural or forest productivity, loss of valuable commercial or recreational fisheries, and so forth. Other costs are related to the impacts of pollution on human health and longevity. For example, the loss of work time due to chronic illness or premature death reduces worker productivity and generates costs related to health care. These and many other types of damages, referred to as externalities in Chapter 2 (see page 49), are estimated to significantly reduce gross domestic product (GDP), the economic bottom line for nations. These costs have not been reliably estimated for all pollutants or for every economy. However, a substantial amount of work has been done to estimate the costs for some of the major sources of pollution in the United States and China, the two largest national economies.

Nicholas Muller and Robert Mendelsohn of the Yale School of Forestry and Environmental Studies estimated the costs of damages created by six common air pollutants: ammonia, fine and coarse particulates, sulfur dioxide, nitrogen dioxide, and VOCs. Making such an estimate for the lower 48 United States was no small task. First, Muller and Mendelsohn had to calculate the concentrations of pollutants across the country and then, using population information, estimate the number and level of exposures of people to the pollutants. Next, they converted exposure levels to likely effects on human mortality, disease rates (morbidity), agriculture, timber production, visibility, structural materials, and recreation. The final step in the analysis was to estimate the economic value of these physical damages. They repeated this analysis for each of the six pollutants at 10,000 locations across the country.

Muller and Mendelsohn’s calculations resulted in an estimate of annual damages by the six pollutants, which they called gross annual damages, or GAD. Summing their estimates for the six common pollutants, Muller and Mendelsohn estimated the GAD for the United States in 2002—the year on which their analysis was focused—at $75 billion to $280 billion. Their estimate covered a broad range of costs because there are numerous uncertainties for the many calculations that went into their estimate. A major uncertainty was the value to place on human mortality risk and how that value changes with age. Another critical uncertainty concerns how exposure to pollutants affects mortality rates. However, regardless of where the actual costs of pollution fall within this range, they are substantial. Muller and Mendelsohn’s estimates placed those costs at 0.7 to 2.8% of U.S. GDP in 2002. The estimated costs of pollution in China are also significant.

China’s economic growth can be described as nothing less than explosive. However, with this growth has come a massive increase in pollution (see introduction, page 386). Concerned about rising pollution levels, China approached the World Bank in 2003 about studying the cost of pollution to the country in terms of impacts on health and nonhealth sectors of the economy. In its study, the World Bank team worked closely with China’s ministries of agriculture, health and water resources and that nation’s own State Environmental Protection Administration.

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One of the key findings of the 2007 study was that rising air pollution accounts for increases in lung disease, including cancer, leading to increased rates of absenteeism in schools and the workplace. Increasing levels of water pollution correlate with higher levels of diarrhea, especially in children under 5, and cancers. The report concludes that by degrading water quality, pollution is worsening China’s chronically short water supplies. According to the World Bank study, the combined costs of air and water pollution in 2003 amounted to approximately $100 billion, or about 5.8% of China’s GDP that year. The estimated costs were 4.3% of GDP for health-related issues and 1.5% for non–health-related aspects of the economy. However you divide these costs, they are major and will likely continue to soar unless China’s rising economic fortunes can be decoupled from increasing pollution.