Air pollution: human health costs

Air pollution damages the health of Canadians which imposes significant financial, economic, and social costs on the Canadian economy and people.  In terms of increased health care costs, missed days of work, and reduced worker productivity, air pollution costs Canadians and the Canadian economy billions of dollars per year.  The full social costs of air pollution, however, are even higher. The social costs of air pollution include not only health care costs and lost productivity, but also the loss in social welfare due to pain, suffering, and death.

Air pollution is linked in varying degrees with a wide variety of health concerns including asthma and cardiovascular disease. Studies from the Toronto Public Health Department, the Government of Canada, and the Ontario Medical Association all show that air pollution can lead to premature death, increased hospital admissions, more emergency room visits, and higher rates of worker absenteeism.

Modest reductions in the levels of key air pollutants can have potentially large impacts on human health and the economy. For example a 10 percent reduction in the ambient levels of ground level ozone and fine particulate matter (PM_2.5) across Canada would have significant health benefits, including reducing the number of premature deaths by hundreds, reducing hospital admissions and emergency room visits by thousands, and reducing restricted activity days by millions. These health improvements would result in several hundred million dollars in savings for Canada's medical system.

The social impact of air pollution on human health is not limited to the medical costs. For example, the medical costs associated with a hospital admission for respiratory illness is, on average, approximately $3,000. But the typical respiratory illness hospital admission might also result in approximately an extra $1,000 in lost wages and worker production. However the social cost of a respiratory hospital admission is even greater than $4,000, because this figure does not account for the pain and suffering that accompanies such illness. The additional social cost of illness is measure based on the willingness of individuals to pay to avoid the illness, either through a direct payment, or through making choices in their life that represent trading off material consumption for improved health.

Many studies in the Environmental Valuation Reference Inventory (EVRI) show that people are willing to pay to reduce many ailments and diseases caused by air pollution. (EVRI is a searchable storehouse of empirical studies on the economic value of environmental benefits and human health effects. The database is available with a free subscription.)

For example, the paper Valuing Stated Preferences for Health Benefits of Improved Air Quality: Results of a Pilot Study co-sponsored by several partners, including Environment Canada and Health Canada, estimated individuals' willingness to pay to avoid health effects associated with air pollution. Depending on the type and severity of the health problem, respondents indicated that on average they would pay between $69 and $1,816 (1996 Canadian Dollars) to avoid an episode of poor health.

For instance, on average, people would pay $143 to avoid an occurrence of an episode that would limit their activity in a minor way such as a runny nose and sore throat. By comparison, people would pay an average of $1,638 to avoid a full day of coughing, wheezing, and shortness of breath that would severely limit their activity.

When the social welfare impacts of illness and mortality related to air pollution are considered, the benefits of reducing air pollution are substantial. For a 10 percent reduction in PM_2.5 and ozone levels, the net social welfare benefit for Canadians would be in excess of $4 billion. Roughly $500 million of these benefits would be direct financial benefits, and the remaining $3.5 million or more is an expression of how much more Canadians would be willing to pay to avoid the health impacts associated with the change in PM and ozone levels.