THE COST OF AIR POLLUTION:
HEALTH IMPACTS OF ROAD
TRANSPORT
Presentation at the 15th Global Conference on Environmental
Taxation, Copenhagen, 24-26.09.14
Nils Axel Braathen,
Principal Administrator, Environment Directorate
In May 2014, the OECD’s
Secretary General, Angel
Gurría, presented the book
The Cost of Air Pollution:
Health Impacts of Road
Transport at the annual
International Transport Forum
in Leipzig, Germany.
The report was prepared by
Dr. Rana Roy.
2
Introduction
3
New epidemiological evidence
0
0,5
1
1,5
2
2,5
3
3,5
4
WHO's GDB 2000 study,2000 data
OECD EnvironmentalOutlook to 2050, 2010 data
WHO's GDB 2010 study,2010 data
WHO's GDB 2012 study,2012 data
Mill
ion
mo
rtal
itie
s d
ue
to
air
po
lluti
on
PM+ ozone
Ozone
PM (2010)
PM (2005)
OECD countries, around 50% attributable to
transport.
A downward trend in most OECD countries, but not
from diesel vehicles.
The trend is threatened by the shift to diesel
vehicles.
4
Road transport’s contribution to
outdoor air pollution
5
Mortalities from air pollution, irrespective of
sector I
200 000
400 000
600 000
800 000
1 000 000
1 200 000
1 400 000
OECD China India Rest of world
Esti
mat
ed
nu
mb
er
of
ann
ual
mo
rtal
itie
s
2005 2010
4% reduction in mortality from 2005 to 2010 in
OECD countries.
Reduction in 20 countries; an increase in 14.
In the non-OECD world, the death toll is still rising.
In China in 2010, about 1.3 million deaths, up 5%
from 2005.
In India in 2010, about 0.7 million; up 12% from
2005.
6
Mortality from air pollution (all sectors)
7
Mortality from air pollution, (all sources)
per million capita
100
200
300
400
500
600
700
800
900
1 000
Nu
mb
er
of
de
ath
s p
er
mill
ion
cap
ita
The 2012 OECD publication Mortality
Risk Valuation in Environment, Health
and Transport Policies established a
new method for calculating country-
specific “values of a statistical life”.
8
The value of a statistical life
“Value” is a measure of what individuals value – incl. consumption, leisure, health and life – and “cost” is a measure of their loss.
The cost of mortality is the “value of statistical life” (VSL) – the trade-off between consumption and a reduction in the risk of dying prematurely. VSL is based on individuals’ “willingness-to-pay”.
Morbidity (sickness) imposes multiple costs (not only health, but also consumption and leisure) – and on several agents.
There is no agreed method or values for calculating the cost of morbidity.
Current best estimate available: 10% of the cost of mortality.
9
Mortality and morbidity costs - Theory
10
The value of a statistical life I
0
1
2
3
4
5
6
7
USD
mill
ions
VSL 2010 in USD millions
VSL 2005 in USD millions
VSL values for OECD countries are much higher
than countries like China or India.
Lower incomes mean there is less consumption
that can be traded off to reduce the risk of death.
But the gap is narrowing.
Per capita GDP rose by about 65% in China and
40% in India between 2005 and 2010.
Higher incomes means higher VSL values.
11
The value of a statistical life II
Using these VSL values, the economic cost of deaths from
outdoor air pollution for OECD countries in 2010 was almost
USD 1.6 trillion.
Adding 10% to account for morbidity gives ~USD 1.7 trillion.
The share attributable to road transport is likely to be
approaching USD 0.9 trillion.
The costs of ambient air pollution in China and India are also
high: USD 1.4 trillion in China in USD 0.5 trillion in India.
The share of road transport here is less than 50%, but still a
very large burden.
12
The cost of air pollution
13
Cost estimate compared to 2010 GDP
0%
2%
4%
6%
8%
10%
12%
14%
Co
st e
stim
ate
co
mp
are
d t
o 2
01
0 G
DP,
pe
r ce
nt
NB: This graph should only be seen as a rough indication. The cost estimates and GDP are not directly commensurable – and the costs we have estimated do not reflect reductions in GDP.
14
Taxation of petrol and diesel
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
€pe
r lit
re
Petrol, 1.1.14 Diesel, 1.1.14
Petrol, 1.1.04 Diesel, 1.1.04
*: 01.01.2013; **: 01.01.2012
15
The share of diesel in new passenger
car registrations
Need to rethink policies that favour diesel.
The welfare benefits from reducing the pollution levels could
easily outweigh the costs of more ambitious pollution controls
Present policy proposals with extraordinarily high benefits
also suggest a past failure to secure ordinarily high benefits.
The macro-economic costs of public expenditure have been
allowed to trump the benefits to individuals.
It would be helpful to make a comprehensive calculation of
the macro-economic cost imposed by air pollution.
OECD’s CIRCLE project will fill part of this gap.
16
A need for better policy appraisals
www.oecd.org/environment/cost-of-air-pollution.htm
www.oecd-ilibrary.org/environment/the-cost-of-air-
pollution_9789264210448-en
17
Further information