Remarks by Angel Gurría, OECD Secretary-General, delivered at the International Transport Forum Summit
21 May 2014, Leipzig, Germany
(as prepared for delivery)
Ladies and Gentlemen,
I am delighted to be here in Leipzig for the Annual Summit of the International Transport Forum. Over the course of the day, we have had rich discussions on demographic change, the global economy, the environment – and their implications for transport. The report I am presenting this evening – The Cost of Air Pollution: Health Impacts of Road Transport – illustrates the intersection of these issues very well.
It makes for alarming reading. The effects of air pollution on people’s health are much higher than previously thought. In turn, we estimate that the costs of air pollution are higher – and they continue to rise. Road transport is a major source of harmful air pollutants, and we can and should do more to reduce them.
Air pollution is now the biggest environmental cause of premature death
New data collected by the World Health Organisation shows that outdoor air pollution kills over three and a half million people worldwide every year – far more than was previously estimated. Air pollution has now become the biggest environmental cause of premature death, overtaking poor sanitation and lack of clean drinking water.
I should clarify that these new estimates are the result of improved measurement and analytical techniques, rather than a doubling of the number of deaths. But this should not diminish the importance of the issue: it just means that for many years we have been underestimating the scale of the problem.
Between 2005 and 2010, the number of premature deaths worldwide from air pollution increased by about 4%. However, this figure hides important differences between countries. The biggest increase in mortality was in the emerging economies, where the growth in traffic has outstripped efforts to improve the environmental performance of vehicles. In China, deaths from air pollution increased by about 5% in this period. In India, they rose by 12%. When we look at the OECD countries, deaths actually fell by about 4% overall, though they still increased in 14 of our 34 member countries.
The health impacts of outdoor air pollution are costly
Ladies and gentlemen,
This new OECD publication analyses the economic costs associated with the health impacts of air pollution. It is important because governments need this information to design and implement responses to air pollution, including from vehicles.
Right now, drivers pay to enjoy mobility. But the cost to the environment and to people’s health isn’t fully reflected in the price we pay to drive. Individuals alone can’t solve the challenge of air pollution – it requires collective action, and so governments must intervene. The political economy equations are never easy: transport companies, automotive manufacturers, drivers, and the general public all have a stake.
To strike the right balance between the costs and benefits of proposed measures, governments need a way of weighing them using a common metric – and that’s exactly what our report does. It uses an economic concept – the “value of a statistical life” – to estimate the value people attach to avoiding death from air pollution. In other words, it asks how much consumption people are willing to give up in order to avoid premature death from air pollution. (I should state at the outset: this exercise is not about putting a price on human life.)
The results are striking. We estimate that for the 34 OECD member countries, the economic cost of deaths and illness from air pollution increased by about 10% between 2005 and 2010, reaching 1.7 trillion US Dollars in 2010. This is a very big number. Allow me to give a specific example: in our host country, Germany, the economic cost of deaths from air pollution amounted to about USD 150 billion in 2010. This figure is equivalent to about half of Germany’s general government health expenditure.
There are wide variations in the costs incurred by different countries: costs in Iceland and New Zealand are relatively small. In contrast, the costs are relatively high in some eastern European countries, such as Hungary and the Slovak Republic, that are making the transition from energy- and pollution-intensive economies.
One of the most important messages – and it is most relevant for this audience – is that about half of these costs in OECD countries are attributable to road transport.
The costs of deaths from air pollution in emerging economies are also very high: 1.4 trillion US Dollars in China, and nearly 500 billion US Dollars in India. In these countries, other sources such as power plants, industry and small boilers, are likely to play a more important role than road transport.
Taking action: identifying policy responses
Ladies and gentlemen,
As the evidence suggests, we are not doing enough to protect people from the harmful effects of air pollution. The study I am launching today shows that the economic benefits of well-designed measures to reduce air emissions could far outweigh the costs.
This report, and other work conducted at the OECD, also suggests that some public policies are part of the problem. I highlight in particular those policies that favour the use of diesel over gasoline in vehicles. Although emission standards have been improving, diesel vehicles are still the source of most of the harmful air pollutants generated by road transport – as much as 80 to 90 per cent in some countries. Despite this, in many countries, the majority of new cars entering the market today are diesel vehicles. This is often because the taxes on vehicles and fuels favour diesel. In fact, Switzerland, the United Kingdom and the United States are the only countries where the taxes on diesel are higher than those on gasoline.
Taxing diesel less than gasoline does not make sense environmentally or economically. So removing incentives that favour diesel – perhaps phased over a few years – is one practical step that many countries could take to reduce the health impacts from vehicle emissions.
Our report highlights a range of other possible responses too. For example, policymakers could consider a further tightening of vehicle emission standards. They could develop more comprehensive approaches for reducing air pollution from all sources in urban areas; and they should do more work to identify measures that could help mitigate the impact of air pollution on vulnerable groups, such as the young and the old.
To conclude, I think our report provides us all with a “wake up call”. We have important evidence of the scale of the problem. We now need to work together to tackle it. We literally need to design better policies for better lives.