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