Environmental regulation is often cast as a burden on business. Clean air standards smother firms in red tape and stifle economies already facing tough times, opponents say.
But what if environmental protection actually boosted economic performance? A new working paper from the National Bureau of Economic Research found that reducing ground-level ozone (a main component of smog) significantly improved worker productivity.
“It’s not just a burden on the firm and on consumers,” said Matthew Neidell, an economist at Columbia University who co-authored the report with Joshua Graff Zivin of the University of California. “There could actually be some benefits as well. There certainly could be health benefits but workers could also be more productive if pollution levels are lower.”
The researchers analyzed data from 1,600 farm workers in the Central Valley of California during the 2009 and 2010 growing seasons. Each time a worker collected a bushel of blueberries or grapes, he or she would scan an individual barcode into a computer.
Since the 500-acre farm was located within 10 miles of an environmental monitoring station, the authors were also able to collect data on daily air quality, including ground-level ozone and other environmental variables. High concentrations of ozone have a nasty effect on lung function, irritating the respiratory system and exacerbating cardiovascular disease.
When Zivin and Neidell merged the productivity and environmental data, they found something else: a distinct link between clean air and worker performance. Specifically, a 10 ppb (parts per billion) reduction in ozone concentration, to a point well below U.S. air quality standards, increased worker productivity by 4.2 per cent.
Now, exposure to the outdoors is considerably higher for a farm worker than for the average cubicle dweller. Still, though only 11.8 per cent of the U.S. workers do their jobs outside, studies show that air pollution, especially particulate matter, often finds its way indoors, Mr. Neidell said.
The question of how strictly governments should limit ozone is controversial and global standards are all over the map. The United States’ Environmental Protection Agency (EPA) limited ground-level ozone to 75 ppb over an eight-hour period in 2008, though its own scientific advisors advised setting standards at between 60 and 70 ppb. The World Health Organization recommends 51 ppb while Canada has set a target of 65 ppb.
“Our results indicate that ozone, even at levels below current air quality standards in most of the world, has significant negative impacts on worker productivity, suggesting that the strengthening of regulations on ozone pollution would yield additional benefits,” the authors note.
How big are those benefits? A back of the envelope calculation suggests that a 10 ppb reduction in the EPA’s ozone standard would translate into an annual cost savings of $1.1-billion, Mr. Neidell said.
