8 Responses to NBER: Air pollution lowers labor productivity
… We find robust evidence that ozone levels well below federal air quality standards have a significant impact on productivity: a 10 ppb decrease in ozone concentrations increases worker productivity by 4.2 percent….
Importantly, this environmental productivity effect suggests that common characterizations of environmental protection as purely a tax on producers and consumers to be weighed against the consumption benefits associated with improved environmental quality may be misguided. Environmental protection can also be viewed as an investment in human capital, and its contribution to firm productivity and economic growth should be incorporated in the calculus of policy makers.
That’s from an important new National Bureau of Economic Research (NBER) study by Zivin and Neidell, “The Impact of Pollution on Worker Productivity.”
We’ve known for a long time that clean-air regulations are a boon to public health, with benefits far outweighing costs (see “Clean Air Act delivered $1.3 trillion in health and other benefits in 2010 alone at $53 billion cost“).
And there is a large literature on the boost in human performance and productivity from improving indoor environments on — as documented at this Lawrence Berkeley National Laboratory website. But the NBER paper is, surprisingly, “the first to rigorously assess the less visible but likely more pervasive impacts on worker productivity.”
Here are some further excerpts from the conclusion:
Our results also speak to the ongoing debates on ozone policy. Ozone pollution continues to be a pervasive environmental issue throughout much of the world. Debates over the optimal level of ozone have ensued for many years, and current efforts to strengthen these standards remain contentious. Defining regulatory thresholds depends, in part, on the benefits associated with avoided exposure, which has traditionally been estimated through a focus on high-visibility health effects such as hospitalizations. The labor productivity impacts measured in this paper help make these benefits calculations more complete. Our results indicate that ozone, even at levels below current air quality standards in most of the world, has significant negative impacts on worker productivity, suggesting that the strengthening of regulations on ozone pollution would yield additional benefits.
These impacts of ozone on agricultural workers are also important in their own right. A back-of-the envelope calculation that applies the environmental productivity effect estimated in the Central Valley of California to the whole of the U.S. suggests that a 10 ppb reduction in the ozone standard would translate into an annual cost savings of approximately $1.1 billion in labor expenditure. In the developing world, where national incomes depend more heavily on agriculture, these productivity effects are likely to have a much larger impact on the economy. These impacts may be especially large in countries like India, China, and Mexico, where rapid industrial growth and automobile penetration contribute precursor chemicals that contribute to substantially higher levels of ozone pollution.
The staggering pollution in China is certainly contributing to a massive loss in productivity. As one U.S. study found, “Closing coal-fired power plants can have a direct, positive impact on children’s cognitive development and health” (See “If you want smarter kids, shut coal plants“). That study concluded, “prenatal exposure to coal-burning emissions was associated with significantly lower average developmental scores and reduced motor development at age two. In the second unexposed group, these adverse effects were no longer observed; and the frequency of delayed motor developmental was significantly reduced.”
The NBER study concludes:
While the impacts of ozone on agricultural productivity are large, the generalizability of these findings to other pollutants and industries is unclear. Agricultural workers face considerably higher levels of exposure to pollution than individuals who work indoors. That said, roughly 11.8 percent of the U.S. labor force works in an industry with regular exposure to outdoor conditions, and this figure is much higher for middle- and lower-income countries (Graff Zivin and Neidell, 2010). Moreover, many forms of outdoor pollution diminish indoor air quality as well. For example, indoor penetration of fine particulate matter ranges from 38-94% for typical residential homes in the US (Abt et al., 2000). Examining the generalizability of the environmental productivity effect estimated in this paper to other pollutants and industries represents a fruitful area for future research.
We obviously need considerably more research in this important area.
Finally, global warming is only going to exacerbate the problem. On our current emissions path, we face warming over much of this country of 10°F and many parts of the world are going to be unbearably hot for large parts of the year. Hot temperatures increase smog formation, everything else being equal.
Further, Skeptical Science reported on one 2010 study that suggests we face a massive drop in productivity if we don’t reverse emissions trends:
It’s widely agreed that warming over 6°C would have disastrous consequences for humankind. Increased drought and rising sea levels are the usual poster boys for climate impacts (and for good reason). However, the direct impact of heat stress on humans gives us a clear climate impact benchmark. Some argue that humans will simply adapt, as we already tolerate a wide range of climates today. But a new paper An adaptability limit to climate change due to heat stress (Sherwood 2010) shows this argument is false. Even modest global warming could expose large fractions of the population to unprecedented heat stress, and severe warming would lead to intolerable conditions over wide regions.
Those who care about human health and welfare need to make reducing pollution of all kinds a top priority.