Monetizing Global Pollution Impacts for The Lancet’s New Report

The Lancet Commission on Pollution and Health has just released a report that details the global health effects and monetary damages associated with environmental pollution. We were responsible for the economic analyses and are summarizing those findings here. 

The crux of the report is that the global burden of pollution on health is significantly larger than is commonly believed and, therefore, governments around the world need to pay much more attention to reducing various types of environmental pollution. We estimated the monetary value of these damages to put the numbers in perspective and be able to compare them to common measures of economic health, such as gross domestic product (GDP). Indeed, according to our most expansive metric, we find that global damages from the pollutants we considered amount to $4.6 trillion per year—about 6 percent of global GDP (note that health effects related to global warming were outside the scope of the study). The less expansive, lower-bound metric yields damages of about two-tenths of a percent of global GDP but is much higher (about two percent of GDP) for low-income countries.

These numbers should be put in context. First, we looked at five classes of pollutants: ambient air pollution, household air pollution from solid fuels, unsafe drinking water, unsafe sanitation, and lead exposure. While this list is reasonably long, it is obviously not comprehensive—the impacts and damages are therefore likely underestimates. Second, due to data limitations, the only health effect we considered was premature death (and associated life-years lost). The Global Burden of Disease project produces detailed country-by-country estimates of premature mortality, which were critical inputs to tallying and monetizing health impacts. Because morbidity damages are excluded, however, our estimates of monetary burden are too low. 

Third, we used two measures for monetizing deaths: lost productivity (output) and a much more comprehensive measure of people’s willingness to pay to reduce their risk of death from pollution. Lost productivity is measured by the loss in future GDP when a person dies prematurely (defined here as before age 65). These losses vary by country depending on labor’s share of GDP and the number of deaths attributable to pollution. The willingness to pay metric represents the strength of people’s concerns about dying prematurely. We estimate this by extrapolating values from high-income countries to upper middle-, lower middle- and low-income countries based on differences in per capita income.