Air pollution may cost advanced economies £2 trillion

Report estimates annual cost of air pollution to 36 world economies, including the UK, USA, China and India

Air pollution is costing the world’s most advanced economies — including the UK, USA, China and India — an estimated $3.5 trillion (£2.07 trillion) per year through premature deaths and ill health, according to a report by a global trade organisation.

Published this week (May 21), the report by the Organisation for Economic Co-operation and Development (OECD) found that around half of the estimated costs are due to road transport, with diesel vehicles producing the most harmful emissions.

OECD chart comparing number of deaths due to air pollution in 2005 and 2011

Furthermore, the report — ‘Cost of Air Pollution: Health Impacts of Road Transport’ — argues that traffic exhaust is a growing threat in fast-expanding cities in China and India.

The cost of air pollution to OECD’s 34 members, which includes the UK, is estimated at $1.7 trillion (more than £1 trillion), while it claims the cost to China alone — which is not an OECD member — is nearly an additional $1.4 trillion (£831 billion). And, it estimates the cost to India — also not an OECD member — is almost $0.5 trillion (£296 billion).

This in total represents a cost of $3.5 trillion (£2.07 trillion) a year across the world’s most advanced economies.

Elsewhere, the report estimates that more than 3.5 million people die each year from outdoor air pollution, while from 2005 to 2010, the death rate rose by 4% worldwide, by 5% in China and by 12% in India.

Presenting the report at the International Transport Forum’s 2014 summit in Germany earlier this month, OECD secretary-general Angel Gurría said: “The price we pay to drive doesn’t reflect the impact of driving on the environment and on people’s health. Tackling air pollution requires collective action.”

As such, OECD urges against applying preferential tax treatment to diesel fuel and vehicles and also supports tightening emission standards, expanding urban bicycle-sharing and electric car programmes. It also advocates extending road charging schemes to reduce congestion.

Mr Gurría added: “There is no environmental justification for taxing diesel less than petrol. Air pollution is destroying our health and the planet. Phasing out tax incentives on diesel would be a step towards reducing the costs to both and in fighting climate change,”