In the latest 2023 World Air Quality Report, India found itself in the unenviable position of being the third most polluted nation, trailing behind Bangladesh and Pakistan. The annual PM2.5 concentration averaged 54.4 micrograms per cubic metre, indicating a deterioration from 2022 when India occupied the eighth spot with 53.3 micrograms per cubic metre.
The report highlighted a concerning revelation regarding Indian cities, with 42 out of 50 of the world's most polluted urban areas. Begusarai, a metropolis in Bihar, emerged as the worst offender with a significant surge in PM2.5 concentration from 19.7 to 118.9 micrograms per cubic metre.
Guwahati and Delhi followed suit with notable escalations in air pollution levels. The data, meticulously compiled from over 30,000 monitoring stations globally, underscores the urgent need for stringent measures to combat air pollution. This underscores the pressing need for immediate action to address the escalating air quality crisis plaguing Indian cities.
Against this backdrop, let’s investigate the economic consequences of India's pollution problem, including its effects on healthcare costs, productivity, tourism, and overall economic growth.
In the realm of economic growth, air pollution often emerges as an unfortunate companion, dampening the urgency for action. There's a common thread tying GDP per capita and emissions levels together, each influencing the other. This perspective has entrenched the belief that economic progress and clean air are perpetually at odds, fostering a view among businesses that environmental regulations stifle growth. Consequently, there's a prevailing notion that compliance with such regulations burdens companies with costs, hindering their potential. This paradigm underscores the need to reassess the relationship between growth and environmental stewardship for a sustainable future.
Clean Air Fund and Dalberg Advisors challenged this narrative by asking: how would resolving air pollution benefit Indian businesses? Delving into comprehensive data analytics, a primary survey, and existing literature, our report, "Air Pollution in India and Its Impact on Business," sheds light on the potential economic growth resulting from mitigating air pollution. This report merges AI-driven air quality data with information on consumer footfall levels, employee traffic, and surveys of business owners to provide a nuanced estimation of business losses. The findings indicate a compelling business case for prioritising clean air initiatives.
The analysis reveals that achieving safe air quality levels in 2019 could have bolstered India's GDP by $95 billion, marking a 3% increase. This translates into substantial benefits for Indian businesses, including reduced costs and heightened revenues. Notably, this potential gain equates to 50% of annual tax collections or 150% of India's healthcare budget. Clean air initiatives promise economic advantages through decreased absenteeism, enhanced on-the-job productivity, increased consumer footfall, and diminished premature mortality.
Furthermore, a deeper dive into air pollution's impact in India unveils potential gains of 1.4 billion working days in 2019, had air pollution-related sick leaves been mitigated. This would have amounted to $6 billion in additional revenues for businesses. Cleaner air also disproportionately benefits caregivers, as vulnerable populations like the elderly and children are particularly susceptible to air pollution. With cleaner air, caregivers would have more time and resources for productive activities. Additionally, the cognitive and physical performance of employees would receive a significant boost, potentially adding $24 billion annually to Indian business revenues.
Current pollution levels necessitate overtime work to compensate for lost output, leading to burnout and high attrition rates among employees. Addressing air pollution could alleviate these issues, fostering improved recruitment prospects for employers in previously polluted Indian cities.
Furthermore, resolving air pollution would not only enhance internal business operations but also directly stimulate consumer spending. Research indicates that spikes in pollution levels prompt consumers to stay indoors to safeguard their health. Improving air quality would have resulted in increased consumer footfall in commercial zones across Indian cities, unlocking an estimated $22 billion in additional revenues for consumer-facing businesses. Discretionary spending categories, such as apparel and restaurants, stand to benefit most from cleaner air, as consumers are less likely to forego such purchases entirely when air quality is improved.
Significantly, addressing air quality concerns could result in a notable reduction of 1.7 million premature deaths, a statistic derived from 2019 data, effectively preventing 18% of all fatalities in India. This vital initiative could translate into a substantial economic benefit of $44 billion for the nation. As India's average age is projected to rise from 27 in 2019 to 32 in 2030, the population's vulnerability to pollution will escalate, amplifying the potential gains from combating air pollution.
The ramifications of clean air extend beyond individual health benefits. In India, where cities like Delhi grapple with 275 days of unhealthy air annually, the economic toll is evident. Research conducted on a pharmacy chain in Delhi underscores the correlation between air quality and healthcare demand, with sales of respiratory medicines increasing six-fold when PM2.5 levels exceed 250ug/m2. Addressing air pollution could enhance Delhi's GDP by up to 6% and reverse the trend of individuals opting to leave the city to safeguard their health, as revealed by a 2019 survey.
Furthermore, the Indian IT sector, a significant contributor to the nation's GDP at 9%, stands to gain substantially from cleaner air. The projected $1.3 billion boost, equivalent to 0.7% of the sector's GDP, would result from reduced absenteeism and heightened productivity. In Delhi alone, lower pollution levels could confer a 33% competitive advantage to local IT companies over their counterparts in countries like the Philippines.
These insights underscore the pivotal role of clean air in fostering not only healthy societies but also a robust global economy. The implications extend beyond India's borders, resonating with policymakers and the international business community. Businesses, in particular, have a vested interest in addressing air pollution, as evidenced by the potential gains awaiting those who invest in clean technologies.
While many businesses have pledged allegiance to national and global emissions targets, there remains ample room for deeper commitment. Studies like these underscore the imperative for businesses to accelerate action and elevate their environmental ambitions by embracing clean technology initiatives.
The imperative to address air pollution transcends geographical boundaries and sectoral interests. It is a collective responsibility that promises substantial economic gains alongside improved public health outcomes. The time for action is now, and businesses must seize the opportunity to lead the charge towards a cleaner, healthier future for all.
