A common view in economic theory is that cleaning up air pollution – along with other environmental protections – creates a burden or “tax” on consumers as well as on those producing the pollution or environmental damage. But a new study by the National Bureau of Economic Research, “The Impact of Air Pollution on Worker Productivity,” flips that idea on its ear. Since they found that pollution significantly reduces worker productivity, they argue that cleaning up pollution would benefit the economy by improving labor conditions and investing in human capital.
The study is timely because the US Environmental Protection Agency has proposed setting a tougher standard for ground-level ozone, which is presently at 75 ppb (parts per billion) over an 8-hour period.
Joshua Graff Zivin and Matthew Neidell assessed how changes in ozone exposure affected the productivity of agricultural workers from California’s Central Valley, and the study provides the first rigorous assessment of this issue. The productivity data comes from a single farm on which both male and female workers harvest blueberries and two types of grapes. The farm is located near three different air quality monitors that measure ozone and other environmental variables.
A 10 ppb reduction in average ozone exposure improved productivity by 4.2 percent, a statistically significant and robust improvement. The ozone level in the area averaged 50 ppb with a maximum of 86 ppb.
“A back-of-the envelope calculation that applies the environmental productivity effect estimated in the Central Valley of California to the whole of the US suggests that a 10 ppb reduction in the ozone standard would translate into an annual cost savings of approximately $1.1 billion in labor expenditure.”
The authors note that for third world nations that rely even more heavily on agriculture, the economic impact would be even higher. Likewise, in countries with rapid industrial growth and heavy pollution, such as India, China, and Mexico, economic impacts could be substantial.
The applicability of the study for other industries remains unclear, but roughly 12% of American workers work with regular exposure to outdoor conditions, and outdoor air quality impacts air that circulates indoors. Other studies have demonstrated that indoor air pollution affects workers, as well. They conclude that this study clearly shows that the economic valuation of cleaning up air pollution may have to be re-evaluated.
“Importantly, this environmental productivity effect suggests that common characterizations of environmental protection as purely a tax on producers and consumers to be weighed against the consumption benefits associated with improved environmental quality may be misguided. Environmental protection can also be viewed as an investment in human capital, and its contribution to firm productivity and economic growth should be incorporated in the calculus of policy makers.”
Photo credit: Monika Thorpe
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