Smog Still Kills
The latest report by the European Environment Agency on air quality estimates the health damage caused atmospheric pollution to lie within the range between €330 billion and €940 billion each year, while globally the OECD has attributed to smog the cause of death of 3.4 million people in 2010, with China leading the world pollution rankings.
In Europe, the most critical situations, in spite of improving trends, are in the regions of the Po Plain (Lombardy, in particular) in Italy, and Silesia in Poland. In fact, smog is a serious problem particularly in urban areas, where noxious emissions become very concentrated. In Italian cities, car traffic is largely responsible for most fine air particle emissions and other dangerous air pollutants like nitrous dioxide and polyclic aromatic hydrocarbons, as well as the primary components of ground-level ozone.
In the context of growing competition between global cities, air quality plays an increasingly important role. It is thus imperative orienting public policy toward the improvement of environmental quality, on the basis of reliable economic assessments determining the costs and benefits (decreased health damages) of the measures than can be adopted. Air pollution has adverse effects on human welfare ranging from health, agriculture, ecosystems, the built environment, and, last but not least, art heritage.
Over time, ever more sophisticated methods for the monetary evaluation of environmental damage have developed. These are based either on the market value of negatively affected resources or on the assessment of how much money people are ready to spend to avoid environmental damage. The first methodology looks at monetary costs in terms of health, social security, and maintenance expenditures, as well as lower revenues from agricultural production and higher frequency of car accidents linked to diminished visibility; the second methodology mainly looks at mortality risks and the increased risk of developing various pathologies.
The Bocconi Institute of Energy Economics and Environmental Management (IEFE) jointly with Fondazione Ca' Granda - Policlinico di Milano recently organized a symposium of economists and physicians to debate the latest findings on the economic evaluation of atmospheric smog, in which World Health Organization (WHO) experts also took part. The latter have pointed out that current EU limits, often breached by member countries, are not enough to protect public health. A 20% reduction in fine air particulates concentration would cut associated mortality by 33%.
The challenge for economic science is twofold: on the one hand it must assess the actual cost of air pollution with more accuracy and detail, on the other it must propose effective mechanisms to internalize the costs of pollution emissions and design cost-effective policies that can reduce smog and its adverse impact on society.
In fact, today the costs of the negative environmental externalities engendered by polluters are, by and large, not born by the polluters themselves. Implementing the "polluter pays" principle would conversely improve social welfare, by introducing disincentives to polluting activities and allocating larger economic resources toward the objective of green growth.
There is ample scope for multidisciplinary research, in order to better appraise cause-and-effect mechanisms, improve monitoring systems (which do not yet enable a complete detection of the spatial and temporal characteristics of pollutants, whose concentration can significantly vary within a limited time span or narrow area), define the money costs of air pollution, apportion the responsibility of generated costs to the various actors, in order to arrive at optimal policy decisions.