Hailey College of Banking & Finance Lahore

Sep 22 - 28, 2008

Pollution, a form of weather condition is the presence of one or more contaminable substances in the atmosphere resulting from gaseous, liquid or solid wastes or by-products that is detrimental or tends to be detrimental to human health or welfare, or can attack infrastructures. Air pollution on the other hand refers to the discharge of harmful substances into the air to the extent that it can reduce visibility or produce undesirable odor. Air pollution results from both the natural and anthropogenic causes. The emissions from volcanoes, desert dust storms, sea spray, plants (spores and pollens) and smoke from forest fires which constitutes particulate matters are natural causes of air pollution. Anthropogenic (man-made) sources which include industrial plants, motor vehicles, power generation, mining, smoke emissions from bush burning, quarrying, gas from waste/refuse combustion, agricultural sprays and chemical processing, exerts higher proportion than the natural factors. Anthropogenic pollutants are the most toxic and are generally emitted where people live, work and play. It typically causes the greatest health problem and exacerbates respiratory problems and other health complications.

Although smog often increases as living standards rise and industrialization proceeds, it so happens that air quality is especially bad in the world's poorest urban areas. As in any place where per capita GDP is low, cooking is done mainly with wood, charcoal, and coal, which emit a lot of smoke as they burn. Furthermore, emissions from factories are virtually unchecked. As a result, concentrations of total suspended particulates (TSP) are extremely high, averaging 400 ?g/m3 and regularly exceeding 500 ?g/m3 (Smith, 1988). Where the environment is 'cheaper' or abatement is more expensive, the pollution intensity of production in a particular sector should be higher, ceteris paribus. However, data scarcity has made it difficult to test the magnitude of these effects, as well as the impact of spatial variation in the prices of capital, labor, energy and materials, the following are some of the factors that have been very helpful to the researchers in testing the magnitudes as referred above:

REGULATION: Ceteris paribus, we expect stricter regulation to have a negative impact on pollution intensity. We have no clear prior about its impact on labor intensity at the sector level.

LABOR PRICE: We naturally expect increasing wages to reduce the labor intensity of industrial output. The effect of wages on pollution intensity is less transparent. Econometric estimates of KLEM (capital, labor, energy, materials) models have suggested that (K,E) and (L,M) are complements in production, while the pairs KE and LM are gross substitutes. If these relations hold, a wage increase should have the following effects on emissions:

(1) Materials use and the volume of polluting residuals should decline;

(2) Labor use should decrease in both processing and pollution abatement activities, with some increase in pollution from the latter effect. However, our prior expectation is that the materials reducing effect should dominate: A wage increase should reduce water pollution intensity.

ENERGY PRICE: If labor and energy are gross substitutes in production, then an increase in the price of energy should increase the labor intensity of production. In the case of pollution, an energy price increase will reduce energy use for both processing and pollution abatement. Abatement activity should therefore fall, and water pollution intensity should rise.

CAPITAL PRICE: A capital price increase should also increase labor intensity. For pollution, an increase in the interest rate or the price of equipment should reduce capital and energy use as well as pollution abatement, while increasing the use of labor and materials in processing. Both reduced abatement and increased materials use should lead to more water pollution.

Despite the above factors have been found extremely correlated to study the impact of pollution, all the researches that have been conducted until today are not final. Enormous amount of financial resources which could be used for economic and socio-development are being loss on a daily basis by government and weather-sensitive economic sectors resulting from this extreme weather phenomenon! Hereunder is a synopsis of impact of pollution on some of the weather-sensitive economic sectors as pointed out by Abayomi A. Abatan of Nigerian Meteorological Agency, Abuja:

A. TOURISM AND RECREATION RESOURCES: Changes to the environmental features will have a direct impact on many tourism destinations which could have far reaching implications not just for the tourism industry, but for other economic sectors. Air pollution put tourism at risk at coastal zones and mountain regions. Coastal tourism is likely to suffer damage from most of the effect of pollution which are evident from turbidity, visibility reduction and undesirable odor. It is obvious that tourism plays an important role in the socio-economic development of many countries. Hence, for sustainable development, accurate weather forecasts and warnings with effective information on air pollution which are essential for planning and for ensuring safe and environmentally sound tourism activities should be made known to tourism industry.

B. AGRICULTURE: The impact of air pollution can put a stress on agricultural sector with a feed- back on other sectors of the economy. Agricultural practice is mainly rain-fed. This implies that farmers depend solely on precipitation or rainfall for optimal productivity. The adventure of technology resulting in modernization, industrialization and urbanization has contributed in a great way to the level of pollutants (CO, O3, NOX, SO2, and PM2.5) suspended in our environment. The pollutants interact with other components of the air (e.g. vapor) and chemical transformations occur to form chemical acids (e.g. carbonic, sulphuric, nitric acids, etc) which are absorbed by water droplets in clouds. The droplets fall as acid rain (pH < 5), (Brimblecombe, 1996). The consequence of acid rain is evidence on the poor agricultural output. The poor agricultural output can lead to excessive increases in food price. This in turn can put pressure on economy policy leading to higher interest rates.

C. COMMUNICATION: Particulate matters (PM) suspended in the atmosphere directly affect communications at all levels. Fine particulate matters (PM) have a longer duration in the atmosphere and act as condensation nuclei upon which other substances may be deposit. It attenuates and scatters radio signals from space, thus it can prevent high frequency (HF) radio wave communication signals completely from being transmitted to ground stations. The net effect is that it may cause interruptions in Radio, Cable and Television signals. For effective sustainability, accurate weather forecasts of this phenomenon should be made available to the industry. Accurate forecasts of these effects can give operators more time to find alternate means of communication.

D. INSURANCE: Insurance sector could be at the receiving end of the impact of air pollution on other weather-sensitive sectors of the nation. Statistic has shown for example that the insurance sector has to cough up more than normal claims on agricultural loss due to adverse weather event. This in turn may have an undesirable effect on premiums.

E. WATER RESOURCES: Water is an essential social, economic and environmental good that is largely dependent on the weather. Water, invaluable natural resources is essential for agriculture, power production, recreation, transport, drinking and sanitation. It is particularly useful for marine ecosystems. The key variables controlling water availability are temperature, precipitation, runoff, and aquifer. Toxic substances are released into the atmosphere in several ways e.g. industries, agricultural sprays, etc. They undergo chemical transformations and are washed into oceans and lakes by precipitations. The dissolved substances decrease the concentration of nutrients available to fish and other aquatic lives. Therefore, the marine ecosystems are endangered. The provisions of accurate, integrated weather forecast on pollution information are critical to optimal resource management.