The real cost of industrial air pollution to the economy

The real cost of industrial air pollution to the economy

The modern world relies on industrial businesses. However, the industry results in air pollution that negatively impacts economies. Controlling this pollution protects workers, businesses and communities. It reduces long-term consequences, such as chronic health issues, productivity losses and business shutdowns.

Certain businesses are already making operational changes to mitigate damage from greenhouse gas (GHG) emissions. Businesses can adopt pollution control systems, such as wet scrubbers, to combat air pollution. To understand why you should also make operational changes, MACH Engineering discusses how air pollution impacts the economy.

How Air Pollution Affects the World Today

The economic costs of industrial air pollution are hefty. Pollutants affect workers’ health, which results in missed workdays and productivity losses. They also impact the community’s perception of the area, which lowers land values. Pollutants that reach plants and soil also reduce the quality of produce. Here’s the economic impact of air pollution in more detail.

1. Health Impact

Frequent, long-term exposure to air contaminants can be hazardous to human health. Particulate matter, carbon monoxide, ozone, sulfur dioxide and nitrogen dioxide are the most concerning pollutants. Breathing them in can cause inflammation, immunosuppression and oxidative stress that lead to diseases. Specifically, air pollution can cause stroke, pneumonia, lung cancer, chronic obstructive pulmonary disease, ischemic heart disease and cataract.

These effects lead to several outcomes.

• Increased health care costs: Americans pay an extra $2,500 per year on average for medical bills due to air pollution from fossil fuels, according to a 2021 study by the Natural Resources Defense Council. The national price tag is $820 billion per year.
• Shortened lifespan: Breathing polluted air is more damaging than smoking tobacco. University of Chicago’s Energy Policy Institute researchers found tobacco can reduce lifespans by an average of 2.2 years globally. Between 2013 and 2021, China improved its air quality by over 40%, while the average lifespan of its residents increased by more than two years. Meanwhile, a 2023 World Bank study found air pollution is one of the leading causes of death in low- to middle-income countries with less stringent regulations. The Natural Resources Defense Council reports the U.S. also experiences 107,000 premature deaths annually due to air pollution.
• Multigenerational impact: A 2025 study by University of Utah researchers shows that industrial pollution affects a grandchild’s neurodevelopment if exposed during the parent’s pregnancy. When either parent is exposed, they risk their grandchild having an intellectual disability, but the risks are higher for pregnant mothers.

Air pollution’s impact on health care costs affects everyone in the community — whether you’re a worker, employer, insurance company or the government. Workers spend their own money for out-of-pocket costs. Meanwhile, insurance companies raise their premiums due to rising spending, which also affects employer benefits. Your business may need to increase the budget for health care spending and adopt insurance policies that reduce liabilities.

The government adjusts its policies to accommodate evolving needs. The value of statistical life (VSL) guides some of these policies. VSL indicates how much people are willing to pay to reduce mortality risk. The Environmental Protection Agency (EPA) uses a central estimate of $7.4 million in 2006 dollars, which gets updated in the year of the analysis. This can justify investing in pollution control solutions.

2. Productivity Impact

The Organisation for Economic Co-operation and Development estimates workers skip 1.2 billion workdays globally due to air pollution. Apart from causing diseases, pollutants impact cognitive performance as they enter the brain through the nose. They reduce people’s sharpness, decision-making and ability to engage in cognitively demanding tasks. Long-term exposure can lead to accumulated damage.

Air pollution can lower the productivity of all worker types. While factory laborers may have closer exposure to air pollution, 2023 research from the Columbia Business School and Leibniz Universität Hannover found that even a small increase in particulate matter makes investors 8.5% less likely to carry out their trades. This means even white-collar workers are affected by air quality.

3. Business Operational Impact

Industrial air pollution affects your business operations due to legal considerations. In the U.S., your business must adhere to the Clean Air Act (CAA) — a federal law that regulates air emissions. The EPA enforces CAA regulations, and noncompliance leads to penalties.

Some violations lead to criminal convictions. For instance, violating the National Emission Standard for Hazardous Air Pollutants can lead to five years in prison and fines of up to $500,000 for businesses. Penalties double for second and subsequent convictions.

The EPA can use its emergency powers to stop your business operations, which leads to revenue losses. This also causes a ripple effect on the supply chain — the shutdown leads to unstable supplies and delayed goods. The shutdown takes effect immediately after the EPA issues it. You’d need the EPA’s approval to restart your operations.

States and local authorities may also have their own compliance rules. For instance, the Minnesota Pollution Control Agency monitors compliance with environmental regulations.

Apart from government authorities, people can sue your business for potential violations. Your business must prepare for legal fees. If the courts decide to award attorney’s fees to the complainant, then you may have to shoulder these fees as well.

4. Agricultural Impact

Air pollution’s economic effects include its impact on agriculture. For instance, nitrogen oxide, which comes from car exhaust and industrial factories, directly damages crop cells. It also contributes to ozone formation — an airborne toxin that reduces crop yields. This reduced production impacts farmers’ income, snowballing into a rise in consumer prices.

Trace gases, such as ozone, lead to about $11-$18 billion annual global losses for corn, wheat and soybean yields. According to the National Aeronautics and Space Administration (NASA), the U.S. can expect the largest economic loss, which is about $3.1 billion. Stanford University reports that decreasing emissions by about half can increase crop yields in China by about 25% and up to 10% in other countries.

Because crops serve as livestock feed, air pollution also impacts animal health. Poor animal health affects the milk, meat and eggs farmers sell, potentially making these products unsafe for end users to consume. Additionally, air pollution leads to acid rain, which damages water bodies. This impacts fish and other wildlife, as only some types of plants and animals can tolerate acidic waters.

5. Infrastructure and Equipment Impact

Air pollution from factories directly affects your machinery and infrastructure. Pollution can infiltrate indoors, which accelerates the wear and tear on your equipment. For instance, dust accumulation causes machines to overheat. Clogged air filters also reduce your heating, ventilation and air conditioning (HVAC) system’s efficiency.

These situations increase the need for repairs and replacements. Worn-down equipment can also reduce worker productivity. If you produce items with limited shelf life, the affected equipment can contaminate, spoil or degrade your products. Spoiled products contribute to losses or financial strain over time.

Air pollution also causes issues with your factory’s infrastructure. Here are a few examples of how that happens:

• Harmful gases and particulate matter corrode metal structures.
• Acid rain decays wooden structures over time.
• Nitrogen oxides and sulfuric acid contribute to the chemical weathering of carbonated stones.
• Corrosive gases lead to concrete deterioration.

Additionally, air pollution affects land values, which impacts your property’s worth. People are willing to pay to live in areas with clean air. They also often perceive polluted areas negatively. Fewer households in the area mean your business has fewer workforce options.

The Broader Economic Picture

Because of how air pollution affects the economy, businesses and communities must consider the broader picture and how they should adapt their long-term goals.

GDP Reduction

Gross domestic product (GDP) determines the performance of a country’s economy and its growth rate. It includes information on government spending, consumer spending, net exports and total investments. Air pollution issues can easily impact some of this data. The Climate & Clean Air Coalition (CCAC) estimates that the economic impact of climate change is about 2%-10% of the global GDP annually, while ambient air pollution costs 4%-5%.

Here are a few reasons air pollution can affect GDP.

• Reduced worker productivity: Due to the health, equipment and operational issues, businesses may expect reduced work outputs. This affects the country’s GDP as a whole.
• Innovation stagnation and missed opportunities: Sticking with potentially outdated machines that emit more pollutants exacerbates air pollution. This can degrade the value of business locations, leading to a lack of business and investment opportunities.
• Agricultural losses: The CCAC estimates that cutting methane emissions can save 52 million tons of crop losses annually by preventing ozone formation. Without sufficient changes, agricultural impacts can force 3 million to 16 million people into extreme poverty.

Rise in Insurance Costs

The rise in health care spending can influence insurance providers to increase their premiums. The population’s overall health impacts the insurance risk pool and cost calculations, and higher illness rates lead to more insurance claims. Chronic diseases also require long-term treatment. These effects can sustain the higher premiums insurers set over time.

Apart from health care costs, your business must consider other pollution liabilities. For instance, pollution or environmental liability insurance covers financial losses due to environmental damages, including air pollution. This expense is another premium to pay for. However, it can cover the cost of treating contaminated soil and water, removing pollutants and ensuring compliance. It can also protect your company if pollution from your business damages other people’s property.

Increased Economic Disparity

The World Health Organization (WHO) states that 7.3 billion people are directly exposed to unsafe levels of particulate matter, and 83% of them live in low- to middle-income countries. These countries also typically have older, more polluting equipment, fossil fuel subsidies and cut-and-burn agricultural practices.

Similarly, underrepresented and low-income groups in the U.S. are exposed to higher levels of particulate matter, making them more susceptible to health risks. People living within a 5-kilometer radius of an emission source within the oil and gas sector are especially susceptible. This risk is due to naphthalene and other polycyclic aromatic hydrocarbons from oil and gas production.

Reduced Global Economic Competitiveness

Since air pollution affects business opportunities and whether people choose to live in the area, heavily affected countries, even the U.S., may reduce their competitive edge on a global scale. For instance, tourists will likely avoid polluted destinations, which leads to a loss of revenue for the tourism industry.

Is Investing in Pollution Control Solutions Worth It?

Innovative pollution control systems, such as scrubbers that can capture, neutralize and eliminate emissions, are often worth their costs. Unchecked air pollution can exacerbate its impacts on health care, productivity, agriculture and business operations. The cost of inaction on industrial air pollution can be more expensive and sometimes irreversible. Reducing premature deaths and increasing business opportunities can be sufficient reasons to take the next step.

In the U.S., the EPA’s Regional Pollution Prevention Recognition Program rewards businesses that reduce their air pollution contributions. For instance, in 2024, Avantor Solon Manufacturing Center reduced its GHG emissions by 15% by improving its HVAC and lighting systems. Businesses that demonstrate their forward-thinking approach prove it’s possible to mitigate environmental damage even in the industrial sector.

Sustainable Changes Benefit the Economy

Air pollution has significant economic consequences. It negatively impacts health within the community, reduces worker productivity and lowers the quality of agricultural produce. Without adequate pollution control solutions, your business might also be susceptible to legal repercussions and infrastructure damage. This can lead to revenue losses, operational issues and even reputational harm.

Meanwhile, mitigating air pollution can positively impact a country’s GDP. It can also help reduce economic disparities, especially in low- to middle-income locations.

This story was produced by MACH Engineering and reviewed and distributed by Stacker.