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The costs and benefits of polluting the air

  • Published at 01:03 am September 2nd, 2018
op ed
The price of industrialization

Societies pollute when they first start to grow economically, then they become cleaner

Dhaka is polluted, it most certainly is. But the real lesson to take from this is how well Dhaka -- and Bangladesh -- is doing, not how badly. A recent editorial here tells us how bad things are, the city being one of the most polluted places on the planet. One of the most polluted cities that is. It’s entirely true that this air pollution is a burden, a heavy one, upon the people and the economy.

However, we do also need to point out that what causes the pollution creates more than the occasional benefit. For example, we are told that Dhaka’s pollution knocks a year, year and a half off the average lifespan. But that very economy which creates the pollution has also led to a rise in average lifespans of a couple of decades over recent years. There are costs and benefits to absolutely everything, and it is that net effect that we are and should be interested in.

This doesn’t mean -- of course it doesn’t -- that we should ignore those costs or attempt to mitigate them. Only that we’ve got to be careful about how we do so in order not to lose the benefits of the underlying activity. We’d not want to kill the Golden Goose over concerns of gold poisoning after all. 

It is in that mitigation that Dhaka is, contrary to near all assumptions, doing so well. This is something I’ve mentioned before concerning the move of the tanneries out of the centre of town. Every economy does become more polluted as it grows. For pollution is an output of people doing things. Doing things like making a living, creating that wealth that allows us to bring up our children and so on. When we’re all purely, absolutely, poor, the pollution is something we just put up with.

If we’re worried about where our next plate of rice is to come from then we don’t -- logically and sensibly -- think about something that might kill us in 20 years. We’ve too much to concentrate upon in the here and now to do that. However, once we do get that little bit richer then we do raise our gaze from the immediate to the decades ahead. Once we have the very basics of life sorted, we think about what will happen beyond tomorrow, beyond next year.

All of this is well enough known that we’ve a name for it concerning the environment, the Kuznets Curve. When no one has anything, there’s little to no pollution. Also, when no one has anything, then no one’s doing or making anything which has that side effect of creating pollution. Then we get that bit richer -- the definition of which is people doing things. Things which, often enough, create that pollution we don’t like. We’ll put up with the pollution because of this newfound joy at actually having things, regular meals, a change of clothes, a roof over our heads. And then we won’t.

That balance of things and pollution changes as we become richer. We spend some part of our greater wealth on having a cleaner environment around us. Sure, perhaps tanning leather without polluting the nearest river is more expensive, but we’ll do it, as our desire for a clean river increases as we get richer. That’s what gives us that Kuznets Curve -- societies become very much more polluted as they first start to grow, then cleaner. Because that’s the way we the people want it.

Which brings us to why Dhaka, Bangladesh itself, is doing so well. If we look back at history, we think we can see a level of income at which this change occurs. Something around an average income per person in that country, that economy, of around $8,000 to $9,000 a year. Note that this uses a special sort of dollar that we can use to compare across time and countries -- we are adjusting already for inflation and price changes over geography. Which is why Bangladesh is doing so well.

For here, we’ve this insistence upon a cleaner economy when we’re at around one third of that level. Using this special dollar (for those interested, from Angus Maddison’s work) the per capita income in Bangladesh is around $3,200 a year today. We’ve reached this concern about leaning up the environment much earlier than other countries did.

Just to give an example, my native Britain started to clean up the air around 1955. We had a series of smogs (pollution plus fog) which killed many thousands of people. The decision was made that the air just must be cleaner, so we banned the use of coal fires in cities as our first step. That was the major problem at the time and it worked -- urban air became breathable for the first time in many decades, even a couple of centuries. 

Our observation is thus that Bangladesh is getting to this change in the curve much, much, earlier in the development process than earlier countries did. That’s something we can indeed describe as doing well. We also see this very same thing happening in the other developing countries today. Those concerns about the environment are arriving much earlier in that process of getting rich.

Which gives us an interesting thought. Dhaka -- along with, say, Jakarta, or the major conurbations of other such nations -- is much more polluted than London, or Berlin, are today. But it’s near certain that Dhaka will never become as polluted as London or Berlin were. Because this process of curbing the pollution that comes from economic development is starting at this very much earlier stage. And yes, we can indeed describe that as doing well, very well indeed actually.

Tim Worstall is a Senior Fellow at the Adam Smith Institute in London.