Economic issues of air pollution

Poor air quality affects Canadians in a variety of far-reaching ways, from our physical health, to our environment, to our economy.

The impacts of air pollution on the economy include direct economic impacts as well as indirect economic impacts stemming from the human health and environmental effects of air pollution.

Reducing air pollution would lead to significant benefits to the socio-economic well-being of Canadians. Reductions in illness and mortality have direct social benefits and also improve the productivity of Canadian industry and decrease health care costs. Air pollution reductions have the potential to directly increase the productivity of the forestry, agriculture, fishing, and tourism industries by decreasing environmental damages suffered by these industries. Being among the world leaders in reducing air pollution may also lead to innovative new industries and economic spin-offs related to green technology in Canada.

There are also costs to reducing air pollution though. Reducing emissions by cutting production, switching fuels or installing scrubbers can cost producers money. Developing and enforcing instruments such as regulation also costs governments money. To a varying degree, costs to producers and governments are ultimately paid for by Canadians through higher taxes and prices.

Although the costs of reducing air pollution can be high at times, most recent cost-benefit studies such as Cost-Benefit Analysis: Replacing Ontario's Coal-Fired Electricity Generation (2005) demonstrate that at current pollution levels, the potential benefits to Canadians of air pollution reductions are much greater than the costs of those reductions.

Internationally, evidence suggests that high levels of environmental stewardship and strict regulation don't necessarily compromise a country's economic competitiveness or standard of living. Many U.S. states and nations of the world with stringent environmental regulations show excellent economic performance.

Canadians pay for poor air quality

As with other forms of pollution, the full social costs of air pollution in Canada continue to be borne by the public through damage to the environment and public health. For example, the Ontario Medical Association has estimated that air pollution costs more than $1 billion a year in hospital admissions, emergency room visits, and absenteeism.

Clean air and the sustainable economy

Clean air is essential for the long term health of Canadians and the Canadian environment. Clean air will also contribute substantially to the long term competitiveness of the Canadian economy, by improving worker productivity, and increasing the productive capacity of several key Canadian industries.

A number of tools are being used, including regulations and partnerships, to encourage activities that support both the environment and the economy. For instance, new technologies, cleaner fuels, science and research, electricity production and conservation, alternative transportation, and new forms of infrastructure can stimulate economic growth in a way that also helps the environment.

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