THE COST OF AIR POLLUTION: HEALTH IMPACTS OF ROAD TRANSPORT Presentation at the 15 th Global Conference on Environmental Taxation, Copenhagen, 24-26.09.14 Nils Axel Braathen, Principal Administrator, Environment Directorate
Introduction 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
Million mortalities due to air pollution New epidemiological evidence 4 3,5 3 2,5 PM+ ozone Ozone PM (2010) PM (2005) 2 1,5 1 0,5 0 WHO's GDB 2000 study, 2000 data OECD Environmental Outlook to 2050, 2010 data WHO's GDB 2010 study, 2010 data WHO's GDB 2012 study, 2012 data 3
Road transport s contribution to outdoor air pollution 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
Estimated number of annual mortalities 1 400 000 1 200 000 Mortalities from air pollution, irrespective of sector I 2005 2010 1 000 000 800 000 600 000 400 000 200 000 OECD China India Rest of world 5
Mortality from air pollution (all sectors) 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
Number of deaths per million capita 1 000 Mortality from air pollution, (all sources) per million capita 900 800 700 600 500 400 300 200 100 7
The value of a statistical life The 2012 OECD publication Mortality Risk Valuation in Environment, Health and Transport Policies established a new method for calculating countryspecific values of a statistical life. 8
Mortality and morbidity costs - Theory 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 willingnessto-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
USD millions The value of a statistical life I 7 6 VSL 2010 in USD millions VSL 2005 in USD millions 5 4 3 2 1 0 10
The value of a statistical life II 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 cost of air pollution 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
Cost estimate compared to 2010 GDP, per cent Cost estimate compared to 2010 GDP 14% 12% 10% 8% 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. 6% 4% 2% 0% 13
per litre Taxation of petrol and diesel 1.0 0.8 Petrol, 1.1.14 Diesel, 1.1.14 Petrol, 1.1.04 Diesel, 1.1.04 0.6 0.4 0.2 0.0-0.2 14 *: 01.01.2013; **: 01.01.2012
The share of diesel in new passenger car registrations 15
A need for better policy appraisals 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
Further information www.oecd.org/environment/cost-of-air-pollution.htm www.oecd-ilibrary.org/environment/the-cost-of-airpollution_9789264210448-en 17