- Improving air quality in India is not just a health problem, it is costing the Indian economy $ 95 billion a year.
- A new data-driven one report von Dalberg Advisors outlines the case for reducing air pollution in order to increase economic growth.
- Policy makers and businesses need to work together and invest in clean technologies for a healthy society and economy.
India is in the process of improving its air quality. This is a much-needed action as 21 of the 30 world’s worst air pollution cities are in India. New Delhi has the worst air quality of any city in the world, with PM2.5 concentrations almost ten times the WHO target.
Conventional wisdom regards air pollution as an inevitable by-product of economic growth and therefore limits the urgent response to it. Often times, GDP per capita and growth rate are linked to emissions levels, with one predicting the other. This has led many companies to understand that growth and good air quality are always contradicting each other, which has led to the perception that environmental regulations are a cost that holds companies back.
Clean Air Fund and Dalberg Advisors challenged this narrative by asking: How would the air pollution solution benefit Indian companies? Based on big data analyzes, a primary survey and existing literature, our report is Air pollution in India and the impact on business, shows how reducing air pollution will boost economic growth. It combines AI-based air pollution data with data on customer frequency, employee traffic, and business owner surveys to estimate business loss with greater accuracy and nuance than ever before. The results of this analysis show that there is a clear business case for clean air.
We found that if India had reached safe air quality levels in 2019, its GDP would have increased by $ 95 billion, or 3%, as Indian companies faced lower costs and higher revenues. This means a value equal to 50% of all taxes collected annually or 150% of the Indian health budget could be repaid. Delivering clean air to India benefits the economy and businesses through lower absenteeism, higher productivity in the workplace, higher footfall and lower premature mortality.
The analysis also shows that India could have gained 1.4 billion working days in 2019 by reducing air pollution-related sickness absenteeism in 2019, which would have resulted in $ 6 billion more revenue for businesses. Caregivers, who typically bear the brunt of crises, benefit disproportionately from cleaner air (older people and children are more prone to air pollution) and have more hours and resources to carry out productive activities. Cleaner air would improve employee cognitive and physical performance and increase Indian business revenues by $ 24 billion a year.
With the current pollution levels, employees have to work overtime to compensate for their own production losses and those of their absent colleagues. Measures to combat air pollution therefore reduce burnout incidents and potentially lower turnover rates, leading to improved hiring prospects for employers in formerly polluted Indian cities.
Eliminating air pollution would not only improve internal business operations, it would also directly boost consumer spending. The analysis has shown that when their pollution increases, consumers tend to stay indoors in order to maintain their health. Raising air quality to safe levels in 2019 would have increased footfall in commercial parks in Indian cities and increased revenue for consumer-centric businesses by $ 22 billion. Discretionary categories like clothing and restaurants benefit most from clean air as consumers are more likely to forego such purchases than postpone them.
In a big step, nine cities and more than 70 organizations in 10 different sectors have come together to provide further impetus for a new multi-year initiative: Net zero carbon cities.
Together with the forum, they have created a vision for the future and started a new framework To help cities rethink urban ecosystems and make sure they are greener, more efficient, more resilient, more circular and more equitable.
From policymakers to businesses, city councils, civil society and the financial sector, the World Economic Forum brings together a range of stakeholders who should play a role if global cities have a chance to meet the net zero carbon target by 2030.
Companies can join the integrated approach to design urban ecosystems to become carbon free by joining a forum platform. Find out more in our Effect story.
Most Bringing air quality to safe levels could lead to 1.7 million fewer premature deaths, according to figures collected in 2019, preventing 18% of all deaths in India. The corresponding potential benefit to the Indian economy is $ 44 billion. Addressing this silent pandemic will create increasing value in the years to come. As India’s average age increases from 27 in 2019 to 32 in 2030, the vulnerability of the Indian population to pollution will continue to increase, leading to higher potential gains from air pollution control.
While the individual benefits of clean air, such as lower absenteeism and higher footfall, are encouraging, their aggregate impact on cities and sectors is much greater. Delhi is exposed to unhealthy air for 275 days. A study of a pharmacy chain in Delhi shows that sales of respiratory drugs increase six-fold when PM2.5 levels exceed 250 ug / m²2. Combating air pollution would thus increase Delhi’s GDP by up to 6%. A 2019 poll shows that 40% of Delhi’s 17,000 residents would prefer to leave the city to maintain their health – and that trend would most likely reverse if pollution decreased.
India could have gained 1.4 billion working days in 2019 by reducing air pollution-related sick leave in 2019.
India’s IT sector, which accounts for 9% of GDP and is a major driver of Indian service sector growth, will benefit by $ 1.3 billion, or 0.7% of its GDP, from cleaner air as it translates into lower absenteeism and higher productivity. In India’s capital alone, less pollution would mean that an IT company would increase its competitive advantage over a company in the Philippines by 33%.
The convincing analysis shows that clean air is not only the backbone of healthy societies, but also of a flourishing global economy, and that solving it can provide enormous benefits. The relevance of the results extends far beyond India to political decision-makers and the international economy. Businesses would do well to pay attention to what they gain from mobilizing their resources to fight air pollution. Finally, the analysis provides a compelling picture of how removing air pollution is healthy for both the environment and the bottom line.
While many companies have committed to national and global emissions targets, studies like this one show that there is room in the business world for greater commitment to accelerating action and increasing their green ambitions by investing in clean technologies.
The results leave no excuse for indolence. The message is worth repeating – clean air makes good business sense.