“The Economic Slowdown Driven by Health Costs of Environmental Pollution: Assessing the Burden and Path to Sustainable Growth”

Author(s): Pandilatha S, Vinita Pathak , Naman Bishambhu , Parvathy M A

Abstract

Environmental pollution has become a critical and widely concerned global economic issue, imposing significant health-related costs that slows down economic development. Pollution-induced diseases lead to rising healthcare expenses, productivity losses, and reduced labor efficiency, particularly in rapidly industrializing economies. This paper examines the economic impact of pollution-related health costs from 2014 to 2024, analyzing global and regional trends. Using data from the World Bank, WHO, and OECD, it presents quantitative insights into the economic burden of pollution and explores policy interventions aimed at mitigating these effects.

1. Introduction

Pollution is the largest environmental cause of disease and premature death. Pollution causes more than 9 million premature deaths, the majority of them due to air pollution(World Bank , 2024).

Industrialization, use of pesticides and nitrogen-based fertilizers, crop residues in agriculture, urbanization, forest fires, desert dust, and inadequate waste management have intensified environmental health risks and pollution, especially in low- and middle-income countries. At the same time, the global economy relies on deeply intertwined supply chains, sustained by more than 100 billion tons of raw materials entering the system each year. Intensive material consumption depletes natural resources and causes negative environmental impacts at every stage of the product lifecycle including production, use phase, and end-of-life. Global waste is expected to increase to 3.4 billion tons by 2050.

The economic consequences of environmental pollution extend far beyond ecological damage. The World Bank (2023) estimates that pollution-related health costs exceed $8.9 trillion annually, accounting for approximately 6.3% of global GDP. Air pollution alone causes 7 million premature deaths per year (WHO, 2023), with associated healthcare expenses and productivity losses significantly slowing economic development. Countries with high pollution levels, such as China, India, and Bangladesh, face reductions in GDP upto 3-4% annually due to pollution-related health issues. This study examines the long-term economic slowdown driven by pollution-induced health costs and assesses policy measures that can mitigate these effects.

2. Review of Literature

2.1. Health Costs of Environmental Pollution

The Lancet Commission on Pollution and Health (2018) reported that pollution-related diseases caused 9 million deaths globally in the year 2015, resulting in loss of productivity upto $4.6 trillion.Global health crises, such as the COVID-19 pandemic, are reminders of the strong linkages between environment and health and of the need to address such linkages systematically.

Recent evidence, Lancet Planetary Health (2023) points to severe devastation caused by exposure to harmful chemicals, such as lead. In 2019, more than 5.5 million adults died from cardiovascular disease arising from lead exposure. 90% of these deaths occurred in lower- and middle-income countries. In the same year, children younger than 5 years of age lost 765 million IQ points.

OECD (2023) estimates that by the year 2060, air pollution could reduce global GDP by 1.2% annually due to increased healthcare expenditures and reduced workforce efficiency.

A WHO (2023) study found that exposure to fine particulate matter (PM2.5) has significantly increased cardiovascular and respiratory diseases, with low-income populations disproportionately affected.

A recent World Bank (2022) publication found that air pollution cost the globe an estimated $8.1 trillion in 2019, equivalent to 6.1 percent of global GDP. More than 95 percent of deaths caused by air pollution occur in low- and middle- income countries.

2.2. Economic Impacts of Pollution-Induced Health Issues

Lancet (2023) Lead exposure cost countries $6 trillion, equivalent to 6.9% of global GDP.

World Bank (2024) reports that pollution-related productivity losses cost India $107 billion annually, approximately 3.5% of GDP.

European Environment Agency (2023) found that air pollution costs the EU economy €350–950 billion per year in healthcare expenses and lost workdays.

A Harvard University (2022) study estimates that air pollution from fossil fuels leads to $900 billion in annual economic losses in the United States.

3. Research Methodology

3.1. Data Collection

This study compiles data from 2014 to 2024 using reports from:

World Bank, WHO, OECD, European Environment Agency

Pollution and economic loss databases

Air pollution as the major health risk and contributor of health expenditures:

In 2024, air pollution caused 8.1 million premature deaths globally, costing the world an estimated $8.1 trillion annually, with the burden disproportionately affecting low- and middle-income countries,making it the second leading global risk factor for death.

The economic cost of air pollution-related health damage is estimated at $8.1 trillion annually, equivalent to 6.1% of global GDP.

Low- and middle-income countries bear the highest burden of air pollution, with 89% of the 4.2 million premature deaths occurring in these areas. More than 700,000 deaths in children under 5 years were linked to air pollution in 2021.Nearly 90% of the disease burden from air pollution is attributed to noncommunicable diseases like heart disease, stroke, diabetes, lung cancer, and chronic obstructive pulmonary disease (COPD).

Countries in Asia, Africa, and the Middle East continue to experience the highest levels of ambient PM2.5.Specifically among the South Asian Countries , Bangladesh, Pakistan, and India rank the highest AQI levels globally.IQAir’s World Air Quality Report ranked Chad as the most polluted country in 2024.

The so-called Indian capital, Delhi remained the most polluted capital in the world, with an annual average PM2.5 concentration of more than 90µg/m3. As per WHO Air Quality Standards,only seven countries in the world had air quality levels at or below the healthy annual average recommended by the World Health Organization (WHO) in 2024.

Thus the Countries adhering to WHO Standards are Australia, Estonia, New Zealand, Iceland, Grenada, Puerto Rico, and French Polynesia as they continue to met the WHO annual PM2.5 guideline level.

A study(Lancet Planet Health) indicates air pollution causes 5% to 12% Crop yield losses globally which is an indirect economic loss due to the non availability of expected level of produce in the market.Thus air pollution by driving rapid Climate Change and unpredictable weather fluctuations is directly responsible for loss of productivity and diminished crop yields.

The economic losses due to increased healthcare costs are significant, and the total burden of diseases is approximately 4.2 % of GDP, rising to 9.9% of GDP by the end of the projection period.

Lead, resulting from pollution as a major public health concern and contributor In health expenditures:

Lead is the single chemical with by far the largest quantified health effects globally,which could be influenced by research so far and data availability.

We have taken the reference of the Lancet Planet Health 2023 study in correspondence to The World Bank, Washington, DC, USA, to analyze the health costs of environmental pollution by lead.which uses ,blood lead level estimates from the Global Burden of Diseases, Injuries, and Risk Factors Study (GBD) 2019. The study examines the IQ loss (presented as estimated loss in IQ points with 95% CIs) in the global population of children younger than 5 years using the blood lead level–IQ loss function from an international pooled analysis, along with the cost of IQ loss, which was calculated only for the proportion of children expected to enter the labour force, as the present value of loss in lifetime income from the IQ loss (presented as cost in US dollars and percentage of gross domestic product (GDP) with a range). It also examines cardiovascular deaths (with 95% CIs) due to lead exposure among people aged 25 years or older using a health impact model that captures the effect of lead exposure on cardiovascular disease mortality that is mediated through mechanisms other than hypertension. Finally, the study utilizes the values of statistical life to estimate the welfare cost of premature mortality (presented as cost in US dollars and percentage of GDP). All estimates were calculated by World Bank income classification and region (for low-income and middle-income countries [LMICs] only) for 2019.

Key indicators analyzed:

Annual economic losses due to pollution-related health impacts in (% of GDP)

Healthcare expenditures related to pollution-induced diseases

Workforce productivity decline due to pollution-related health conditions

3.2. Analytical Approach

A comparative analysis of pollution-related economic losses in terms of % loss in GDP across different income-level countries is conducted.Through this a direct correlation between pollution levels and economic slowdown is established.

4. Results and Discussion

4.1. Trends in Pollution-Related Economic Losses (2014-2024)

Over the past decade, pollution-related economic losses have increased substantially:

Global losses rose from $5.4 trillion in 2014 to over $8.9 trillion in 2024, reflecting worsening air quality and rising healthcare costs.

Lead is one of WHO’s ten chemicals of major public health concern, and lead exposure is ranked fourth among major environmental health risk factors after ambient particulate matter air pollution, household air pollution from solid fuels, and unsafe household drinking water, sanitation, and handwashing according to the Global Burden of Diseases, Injuries, and Risk Factors Study (GBD) 2019.

Table 1.Countries classified based on Income status,World Bank regions and their respective population-weighted means blood lead levels (2019)