The More Polluted the Air We Breathe, the Less Productive We Become

MONTHLY BAROMETER – WELLNESS EDITION

MONTHLY BAROMETER:

Some practical take-aways for business and investors from the many sessions on sustainability at the recent Summit of Minds: (1) the pricing of environmental and possibly some societal externalities will become a reality; (2) supply chains will shorten (hyper-localization and sharing platforms will become favored themes); (3) sustainable healthy eating and “locavorism” will gain ground; (4) recycling and managing waste strategies will flourish. All businesses whose operations are underpinned by the ideas above will have strong macro wind in their sails.

WELLNESS EDITION:

Air pollution, and the way in which it affects, in particular, wellness, will be at the forefront of pricing negative environmental externalities. The evidence that air pollution (especially particulates below 2.5 micrometers) poses a long-term health issue is by now well-known and widespread, but recent research shows that it has a quasi-immediate negative impact on productivity. Simply put: The more polluted the air we breathe, the less effective and slower we become.

To illustrate the point, a recent study conducted in different Chinese cities concludes that productivity can fall by 5–6 percent on polluted days. Similarly, three economists showed that a modest increase in particulates leads to a significant decline in cognitive capabilities during exams, with lasting consequences in terms of income. The bottom line: Study after study shows that air pollution impairs cognitive development and thus negatively affects productivity. This suggests that the quality of air will become a central tenet of real estate and workplace wellness.