What’s the Cost of Breathing Polluted Air?

The civil movement “Gavigudet” constantly shares reports and studies to the society about the colossal cost of air pollution. For example, according to the World Bank, respiratory and cardiovascular diseases caused by air pollution alone cost the global economy $5 trillion a year.^[1] The World Bank’s another report “Georgia towards Green and Resilient Growth” notes that $560 million was spent on ambient and indoor air pollution, which amounts to the 3% of the GDP in 2018. ^[2] In the special report by ombudsman “The Right to Clean Air”, amongside other important information, we read that in 2016 – 120,050,566 GEL was spent from the government budget on treating diseases caused by particular pollutants (NO2, SO2, CO, O3, PM10, and PM2.5).^[3]

Our readers are familiar with the fatal consequences of air pollution, due to which, about 7 million people die every year in the world.^[4] The average global citizen loses 2.2 years of life with today’s levels of air pollution (for comparison, smoking shortens life expectancy by 1.92 years, while alcohol and drugs shorten life expectancy by 0.77 years).^[5]

How can we “measure” the damage caused by air pollution? Is there a way to evaluate what’s our physical or mental health worth? Of course, there is no standard tool for determining the value of a particular human life and we think it’s unethical because human life is priceless.

However, in economics there is a method – value of a statistical life – VSL,[6] which allows analysts to estimate the monetary value of health damage. It should be noted that value of a statistical life is the amount that people would pay for changes that would reduce the likelihood of their death, and not the amount that people would pay to prevent a particular case of death.

Suppose each person in a sample of 100,000 people were asked how much he or she would be willing to pay for a reduction in their individual risk of dying of 1 in 100,000, or 0.001%, over the next year. Since this reduction in risk would mean that we would expect one fewer death among the sample of 100,000 people over the next year on average, this is sometimes described as “one statistical life saved.” Now suppose that the average response to this hypothetical question was $100. Then the total dollar amount that the group would be willing to pay to save one statistical life in a year would be $100 per person × 100,000 people, or $10 million. This is what is meant by the “value of a statistical life.”

The VSL is successfully used by the government and the private sector. For the government, the budget money spent to save people’s lives is another way to determine the average value of a statistical life. This method is also used in benefit-cost analysis for the new regulations or policies. Benefit-cost analysis is an analytical tool used to evaluate public policy options. For environmental policies, benefits are determined by what individuals would be willing to pay for risk reductions or for other improvements from pollution prevention. Costs are determined by the dollar value of the resources directed to pollution reduction. If the total benefits exceed the total costs, then the policy is said to “pass a benefit-cost test”.[7]

“Value of a statistical life” is a pre-determined, fixed number for specific countries. Some of them calculate the VSL annually, while others value the life of one person in general. As mentioned above, air pollution shortens human life by an average of 2.2 years, and below we will try to demonstrate the “value” of 2.2 years of our lives with different examples.

-The VSL in the United States is $129,000 per year, therefore the 2.2 year “worth” will be $283,000. [8]

-In Australia, this number is $159,723, respectively in 2 years – $351 390.[9]

-In New Zealand according to 2016 estimation, the VSL was 4.14 million,[10] with an average life expectancy of 82.06 years in 2020,[11] the cost of 2.2 years will be $110,992.

-In Sweden VSL is 22 million Swedish krona or $2.4 million,[12] the average life expectancy in the country is 83.33 years,[13] which means the value of 2.2 years is $63,362.

Since we don’t have data on Georgia, we took the average data of these 4 countries as a reference – $202 186. Approximately, this is the cost of reducing our life expectancy by 2.2 years.

The only purpose of this information is to show the society that in reality, the unorganized manufacturing process of enterprises has a tremendous impact on citizens and in the long term, is also economically unjustified. Not to mention the physical or mental damage that has become a component of the daily lives of the 130,000 people living in the city and whose objective, generalized health evaluation is impossible. We really want to emphasize once again that for the civil movement “Gavigudet” people’s lives and their health is priceless and therefore, the damage that is caused on a daily basis can’t be compensated with any amount of money.

[1] https://www.theguardian.com/environment/2021/aug/27/air-pollution-linked-to-more-severe-mental-illness-study

[2] https://greenalt.org/blogs/heris-dabindzureba-sakartveloshi/?fbclid=IwAR2pUYYpnJXvCzauk1dQ92abf1jbyWYzbIp9QSAe_lXCbHBxEq5Yt0JeeuA

[3] https://ombudsman.ge/res/docs/2019040113594483544.pdf

[4] https://www.who.int/news-room/spotlight/how-air-pollution-is-destroying-our-health

[5] https://www.theguardian.com/environment/2021/sep/01/air-pollution-is-slashing-years-off-the-lives-of-billions-report-finds

[6] https://www.epa.gov/environmental-economics/mortality-risk-valuation

[7] https://www.epa.gov/environmental-economics/mortality-risk-valuation

[8] https://en.wikipedia.org/wiki/Value_of_life

[9] https://en.wikipedia.org/wiki/Value_of_life

[10] https://www.newsroom.co.nz/ideasroom/how-much-is-a-nz-life-worth

[11] https://www.statista.com/statistics/1041182/life-expectancy-new-zealand-all-time/

[12] https://www.sciencedirect.com/science/article/abs/pii/S016885101200259X

[13] https://www.worldometers.info/demographics/life-expectancy/