The Price of Growth: Toxic Smog in China and Elsewhere
When asked at the recent National People’s Congress if he wore a mask on hazy days in Beijing, Huang Jiefu, a well-known surgeon and former deputy minister of health replied: “No, I don’t. Average masks are ineffective against PM2.5.” Unfortunately, across China, hazy days have become more of the norm than the exception.
Pollution is costing lives, and yet traditional economics and accounting frameworks are not adept at providing a solution.
Until fairly recently, very few people had heard of the air pollutant PM2.5, which refers to “particulate matter” with a diameter of 2.5 micrometers or less. (By comparison, human hair has a width of 17 to 181 micrometers.) PM2.5 is considered very hazardous because the particulates are small enough to enter the bloodstream and damage lung tissue. In fact, studies show that inhaling particulate matter can lead to asthma, lung cancer, cardiovascular issues, respiratory diseases, birth defects, and premature death.
The World Health Organization’s air quality guidelines set the safe level of exposure to PM2.5 over a 24-hour period at 25 micrograms per cubic meter. The US Environmental Protection Agency uses a 0–500 (micrograms per cubic meter) scale and rates levels above 250 as hazardous.
As air pollution reached more than 30 times above the WHO safety levels and well beyond the top of the US EPA scale in Beijing last year, references to PM2.5 began to crop up frequently in conversations, blogs, and newspaper articles. To give you an idea of just how frequently, a search on Baidu, the Chinese search engine, generated more than 56 million hits. By comparison, Shenzhou V, the first Chinese manned spacecraft, generated just over 3 million hits.
PM2.5 has even entered political discourse. Chinese premier Li Keqiang “declared war” on pollution at the NPC, saying efforts would focus first on reducing hazardous particulate matter.
So what is behind the drastic deterioration in air quality?
Dust storms have long been a fixture of the Beijing springtime, largely as a result of the deforestation caused by agricultural expansion and urbanization. These days, however, fossil fuels are believed to be the main culprit behind the haze. Think about it: Industries are growing, households own more cars, and coal also remains the main source of energy for winter heating. Still, there is no consensus as to why PM2.5 surged over the last year in Beijing and surrounding provinces, and why it spread across the country, from Harbin to Hong Kong.
For many years, environmental issues have played second fiddle to other more pressing priorities, such as economic growth, employment, etc. In developing countries, where poverty remains prevalent, protecting the environment seems like quite a luxury. Decision-makers only worry about it when they can afford to. The underlying assumption is that governments want to feed the entire population, or improve the standard of living, and so on; and the trade-off is that people have to put up with air that is not as fresh and water that is not as pure as it is in pristine forests and streams. That is, until the day comes when the air is unbreathable, the water undrinkable, and people start demanding that the government find solutions.
In Asia, the problem also stretches to places far beyond China. In early March, Southeast Asia, including large parts of Indonesia, Malaysia, and Singapore, was engulfed in haze caused by a forest fire. This was not the first time: there were major fires in 1997, 2006, and 2013.
The situation in India is also far worse than most could imagine. According to a recent World Bank study, India, a country often compared to China in terms of economic growth potential, ranked 155 out of 178 countries in environmental sustainability.
This phenomenon is certainly not limited to the developing world. The United Kingdom and United States have both seen their fair share of polluted skies.
Researchers believe the week-long Great Smog of 1952 in London caused as many as 12,000 deaths. More than 100,000 fell sick. This prompted the UK government to institute the Clean Air Act of 1956.
Still, as recently as February of this year, the European commission wanted to fine the United Kingdom up to £300 million a year for failing to reduce air pollution after 15 years of warnings.
In the United States, smog was blamed for hundreds of deaths in the 1960s and 1970s. Los Angles was particularly notorious for its poor air quality. Thanks to tight government regulations, blue skies have returned to the City of Angels, although air quality is still often below healthy standards.
In a report released last month, the World Health Organization said that in 2012 around 7 million people died — one in eight of total global deaths — as a result of air pollution exposure.
So how does one put a price on pollution? And how much would you pay for blue skies?
Unfortunately, traditional economics and accounting frameworks are not set up to answer these questions. Economists refer to pollution as a “negative externality” of economic activities, which is not saying much more than “pollution is the cost of doing business.” Accountants have no basis to book the cost until it can be “internalized,” which usually takes the form of environmental regulations.
Given this approach, the solution would be for us as a society to collectively decide on a price tag for pollution so “the cost of doing business” indeed becomes part of the offenders’ cost-benefit calculations. In reality, developing and operating such a scheme often proves far too complex, as demonstrated by the history of the Kyoto Protocol. Over the last decade, there has been real progress in emissions trading, in which a ceiling is set for pollution, and permits to pollute are allocated and traded among the offenders. The lack of commitment from many major countries to ratify the Kyoto Protocol, however, has reduced its impact.
At the NPC session, Huang went on to explain to reporters that “pollution is the price we pay for growth.” Has it become too heavy a price?
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