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Air pollution cost India 8.5% of its GDP in 2013

Economic toll may be more than $560 Billion: World Bank Report

Policy Pulse
Publish Date: Sep 9 2016 3:50PM | Updated Date: Sep 9 2016 3:50PM

Air pollution cost India 8.5% of its GDP in 2013

Economic toll of rising air pollution in India may be as high as 8.5% of its GDP in 2013 or more than $560 Billion, a World Bank Report has suggested.


The study, released on Thursday, says air pollution robs nations of significant potential to grow, which after being calculated through total 'welfare losses' and loss in labour output, reaches a staggering amount especially for developing countries.


While air pollution has emerged as the deadliest form of pollution and the fourth leading risk factor for premature deaths worldwide, the economic burden it brings along is massive, a new study by a joint study of the World Bank and the Institute for Health Metrics and Evaluation (IHME) has suggested.


When looking at fatalities across all age groups through the lens of "welfare losses", an approach commonly used to evaluate the costs and benefits of environmental regulations in a given country context, the aggregate cost of premature deaths was more than US$5 trillion worldwide in 2013. In East and South Asia, welfare losses related to air pollution were the equivalent of about 7.5 percent of GDP.


For India, losses under this category add up to $505.1 billion, or approximately 7.69% of its gross domestic product (GDP), in 2013. The country ranks second globally after China in terms of losses incurred.


Neighbouring China followed close behind with $44.56 billion, or 0.28% of its GDP, lost due to forgone labour output. Premature deaths due to air pollution in 2013 cost the global economy about $225 billion in lost labour income, or about $5.11 trillion in welfare losses, worldwide, according to the report.


Adding welfare costs and costs of lost labour due to air pollution puts India’s GDP loss at more than 8.5% in 2013. India’s GDP growth at constant prices was less than 7% in 2013-14. So air pollution alone might be offsetting the Indian economy’s growth efforts.


An estimated 5.5 million lives were lost in 2013 to diseases associated with outdoor and household air pollution, causing human suffering and reducing economic development. While pollution-related deaths strike mainly young children and the elderly, premature deaths also result in lost labour income for working-age men and women.