House of Commons - Air Quality - Environmental Audit Committee

Air Quality - Environmental Audit Committee Contents

3 The costs of poor air quality

20. The 2007 Air Quality Strategy proposed new policy measures to improve air quality based heavily on a cost-benefit analysis. In the analysis some costs were monetised while others were assessed on a qualitative basis. In the next part of this report we examine some of the key costs.

Health costs

21. The main cost of air pollution arises from the adverse health effects on people. The 2007 Air Quality Strategy estimates that the health impact of man-made particulate air pollution experienced in the UK in 2005 cost between £8.5 billion and £20.2 billion a year.[16] These figures were provided by the Interdepartmental Group on Costs and Benefits, which includes Defra, the Department of Health and the Department for Transport. This estimate was based on life-years lost and the monetisation of this reflects estimates of the UK population's 'willingness to pay' to avoid these health impacts.

22. The Air Quality Management Resource Centre note that the health impacts of air quality in the UK are almost twice those of physical inactivity, estimated to be £10.7 billion per annum,[17] yet it fails to receive the same level of attention as the latter within medical and media circles. The costs of poor air quality are comparable to the cost of alcohol misuse to society, estimated to be £12-£18 billion per annum.[18] Isabel Dedring, the Mayor of London's Environmental Advisor, said that there was no link between the funding that was available to tackle air quality and the avoided health costs from improvements to air quality. She thought this was not the case for other social health issues.[19]

23. The £8-20 billion total cost of poor air quality is likely to be an under-estimate. The Air Quality Strategy ignores the impact on morbidity, costing only mortality.[20]There are additional costs to the NHS from respiratory hospital admissions triggered by air pollution. For example, in 2007/08, there were over 74,000 emergency admissions to hospital because of asthma and the NHS's non-elective spell tariff was £612 million for 2007/08. There are clear links between asthma and air quality; Asthma UK estimate the annual cost of asthma to society at £2.3 billion.[21]

24. Defra recognised that health benefits from policy measures to improve air quality are undervalued, but argued that this was because it was not possible to quantify all health outcomes. Work by COMEAP to review the evidence is ongoing and is expected to show that there are health benefits over and above those that have been monetised. COMEAP will also consider the literature on chronic morbidity effects, an area it has not considered before. It also plans to update its estimate of the risks associated with short-term exposure to air pollutants.[22]

25. Nitrogen dioxide has not been included in past analysis of costs. Previous attempts to quantify the effects of exposure to this have not been successful, and COMEAP did not believe there was sufficient evidence on which to base any quantification of the health impacts. It has been difficult to disentangle the effects of NO₂ from those of other pollutants.[23] No direct health benefits from measures to reduce NO₂ have been included in the main cost-benefit analyses supporting the 2007 Air Quality Strategy.

26. COMEAP have acknowledged that further work is required in order to understand the health effects associated with exposure to NO₂ and is in discussion with the Health Protection Agency to develop a programme of work in this area.

27. Good air quality makes a key contribution to preventative healthcare. The Government should ensure that local strategic partnerships embed plans to deliver real improvements in local air quality.

Environmental costs

28. Air pollution has wide-ranging environmental impacts including loss of biodiversity, reduced crop yields and a contribution to climate change. Following the very large reductions in sulphur emissions in the UK and across Europe since the 1970s, NO_X, ammonia and ground level ozone now have the most significant impact on the environment. Excess nitrogen from emissions of ammonia and NO_X leads to excessive plant growth and decay (eutrophication) that disturbs the biodiversity of both land-based and water-based ecosystems. Emissions of ammonia and NO_X also contribute to acidification of ecosystems. Ozone has a direct effect on plants, damaging their leaf structure, reducing growth and compromising their defence mechanisms.

29. A 'critical load' is an estimate of the exposure to one or more air pollutants, above which there is risk of damage to certain sensitive elements of the environment. Critical loads for acidity and the fertilising effects of nitrogen are exceeded in over half the UK's natural and semi-natural habitats. Currently 60% of sensitive habitats exceed the critical load for nutrient nitrogen,[24] and ammonia is a major source of this. Agricultural activities are the principal source of ammonia, but only a small fraction of national ammonia emissions are subject to any regulatory control. The Environment Agency called for a national ammonia reduction strategy, as was originally proposed in the UK's Air Quality Strategy 2007: it noted that there were still no firm proposals.[25]

30. Defra told us that eutrophication problems were being addressed, and that there had been a reduction in emissions and concentrations of nitrogen oxides. But it recognised that further policy action would be required to reduce emissions of ammonia.[26]

31. Ozone exposures exceed critical loads for effects on crops, forests and semi-natural vegetation over substantial areas of the UK. Defra estimate that ozone reduces the yield of wheat grown in southern Britain by 5% to 15%, which would imply a serious financial loss to agriculture.[27] Ground level ozone also contributes to global warming indirectly by reducing carbon take up by vegetation, as well as being a greenhouse gas in its own right.

32. The 2007 Air Quality Strategy does not cost the impact of air pollution on ecosystems. Valuing ecosystems is complex and a methodology is still at the developmental stage. Friends of the Earth, however, believed that the UK's methodology was in line with EU approaches and that the UK was going broadly in the right direction.[28] Defra's ecosystems services approach will look at the services a healthy ecosystem provides, including well-being, clean air, clean water. It should enable a cost to be put on any impact on an ecosystem. We welcomed this approach in our report of 2008, Halting biodiversity loss and called on the Government to complete it by the earliest opportunity.[29] In our current inquiry, however, Defra told us that more research is still needed at both UK and EU levels to reach the point where it is possible to value ecosystems to a satisfactory standard.[30]

EU fines

33. Defra believe that "there is a pretty good chance" of not being fined for particulate matter limit value exceedences. They recognised that the NO_X emissions ceiling targets and Nitrogen dioxide limit values present a "significantly bigger challenge".[31] The size of any fines would depend on rulings from the European Court of Justice but could be a combination of a lump sum payment and a fine levied each day until targets were reached. It has been reported that fines could reach £300 million should the Commission continue to reject the UK's application for an extension,[32] but there is no precedent for a similar environmental contravention and the magnitude of any fines cannot be predicted with certainty.

34. The Local Authorities Coordinators of Regulatory Services (LACORS) and the Chartered Institution of Water and Environmental Management (CIWEM) argued that a cost-benefit approach was inappropriate for identifying the best policies for achieving a mandatory requirement. They favoured using cost effectiveness as this would identify the cheapest package of measures to ensure mandatory targets were met.[33]

35. The Government must assess the most cost effective way of meeting mandatory EU targets rather than relying only on a cost-benefit analysis of possible actions.

36. The cost-benefit analysis undertaken for the Air Quality Strategy did not give sufficient weight to the health and environmental benefits of improving air quality nor did it take any account of likely EU fines. Many of the potential benefits are not monetised and the impacts of poor air quality go much wider than just mortality. A wider evaluation of costs and benefits is needed as costs currently cover only a small part of the impacts. The Interdepartmental Group on Costs and Benefits is introducing a methodology that will account for the cost of abating environmental damage when limit values are likely to be exceeded, but this needs to be developed further and address all environmental damage and take into account the wider health benefits.[34]

37. The Government's assessment of the costs and benefits of action on air quality does not account for all the health effects of poor air quality, the damage to ecosystems and potential fines. The Government should improve the assessment of the costs and benefits of better air quality. The Government must therefore urgently:

quantify the impact on morbidity and the cost to the NHS of poor air quality;
improve understanding of the health effects of exposure to nitrogen dioxide;
estimate the cost of the damage to ecosystems and the environment from poor air quality;
fund the research necessary to fill the gaps in the evidence base; and
take account of the likely fines from missed EU targets in its air policy appraisal.