Pollution In India Harms Health and Wealth, Says Economist Alex Tabarrok
Alex Tabarrok, a Canadian-American economist, explains how air pollution affects India’s economy, arguing that a country's growth need not come at the cost of environmental protection and public health
There is an assumption that pollution is an unavoidable price that fast-growing economies must pay on the way to becoming richer. In that context, is India simply going through a phase that other developed economies went through?
Richer societies can afford more environmental protection. But that does not mean poor societies should wait to protect themselves. The environmental Kuznets curve [suggests that environmental degradation rises in the early stages of economic development but falls as a country becomes richer] is an observation, not a development strategy. Nothing says India has to pass through Delhi-level smog on its way to prosperity.
When London had its great smog in 1952, nobody knew that fine particulates cross into the bloodstream and the brain, and nobody had cheap scrubbers, nuclear power or solar panels. India has scientific knowledge and pollution-control technologies that earlier industrialisers lacked. It should use that advantage rather than repeat their mistakes.
China showed what is possible. After Beijing declared its 'war on pollution' in 2014, national population-weighted PM2.5 fell 40.8% between 2014 and 2023 and the economy kept growing.
So, I don’t accept the phase argument. India is paying a price that other countries paid partly out of ignorance. India can do better.
Could you elaborate on your earlier point that pollution is an attack on human capital?
Human capital is the health, education and knowledge that make human beings economically valuable. What we have learnt in the past several decades is that workers exposed to high pollution get worse at their jobs.
When pollution rises, garment workers in Bengaluru become less productive, chess players make more mistakes, umpires make more bad calls. Studies of children in India and around the world who are unlucky enough to be exposed to high pollution on test-taking days have lower scores.
The long-run effects are even bigger. Children exposed to high pollution in the womb and early childhood grow up with lower test scores and lower adult earnings. That is human capital destroyed before anyone has a chance to use it.
Many of these effects show up at pollution levels that would count as a clear day in Delhi. The WHO guideline for annual PM2.5 is 5 micrograms per cubic metre. Large parts of north India run at 10-20x that. Estimates from the Air Quality Life Index put the average loss of life expectancy in India at several years, and in Delhi something closer to a decade.
Given the negative effects of pollution on productivity, we should recognise that clean air is not just a reward for development. It can be an input into development. I suspect India is on the wrong side of what I might call the health 'Laffer' curve [suggests that there is an optimal tax rate that maximises government revenue without discouraging economic activity and growth]. In other words, at current levels, pollution in India harms health and wealth.
Reducing pollution isn't a welfare programme for the poor, it's a health and growth programme for everyone
Doesn’t the demographic dividend argue for growth first?
The demographic dividend is people. If you poison the people, you shrink the dividend. A young workforce with lower cognitive scores, more respiratory illness and shorter working lives is a smaller asset than the headcount suggests, and the damage to today’s children shows up as lower productivity in future decades.
The premise also assumes that India’s pollution is a byproduct of economic growth. Much of it isn’t. Farmers burning rice stubble in Punjab and Haryana produce more smoke than GDP. Burning garbage, road dust and old coal plants running without scrubbers are not engines of the economy. Families cooking with wood and dung are polluting because they are poor. Cleaning up these sources costs very little output, and some of the fixes would raise it.
Bad air is a tax on talent. And not just Indian talent. Who wants to visit Delhi in November? Foreign skilled professionals, firms and tourists all have options. Clear skies are a selling point for incredible India.
Is India’s growth model broken?
Broken is too strong. Misdirected is closer. India’s comparative advantage is its people. But frankly, India under invests in its people. Whether the next job is in a factory, a hospital or a software company, it requires healthy, capable workers.
India has a strong talent pool, but the pool should be deeper. Roughly half of fifth graders in rural India can’t read a second-grade text. Improving educational system and basic health is not rocket science—it takes state capacity and state will. And I don't just mean government schools. India has a vibrant private sector in education.
A country betting its future on brainpower can’t afford to leave its brains poorly educated or poisoned.
Does pollution deepen inequality?
Pollution reinforces disadvantage. The poor can’t afford air purifiers and they lose wages when they get sick. The affluent have purifiers in every room and leave for Goa or the hills when the smog arrives.
Nevertheless, although the rich can buy some cleaner indoor air they cannot buy a clean city. The air in India is a public bad that the rich cannot fully escape. Politicians, judges and journalists breathe it too. That shared misery is probably the best political lever India has. Reducing pollution isn't a welfare programme for the poor, it's a health and growth programme for everyone.
What should India do?
Credible monitoring is key. Combine satellite data, ground monitors and calibrated low-cost sensors, and make the data public. Independently verify industrial emissions. Then target the biggest health gains per rupee spent.
Use markets. Gujarat’s emissions-trading experiment in Surat cut participating plants’ particulate emissions by 20–30% relative to conventional regulation. [Economists] Michael Greenstone, Rohini Pande, Nicholas Ryan and Anant Sudarshan also estimated that trading lowered the cost of achieving a given emissions level by 11%. Scale that up.
Finally, govern the whole region that shares the same air. Delhi’s pollution comes from within the city and from Punjab, Haryana, Uttar Pradesh and beyond. No city government can fix that alone. The regional air-quality commission already exists; give it clear targets and hold it accountable for results. Skip the smog towers and the odd-even driving days. Cut pollution at the source.
India need not choose between cleaner air and prosperity. Well-designed pollution control can make India healthier and wealthier.