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Air Pollution Reduces Economic Activity: Evidence from India

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  • Behrer,Arnold Patrick
  • Choudhary,Rishabh
  • Sharma,Dhruv

Abstract

Exposure to fine particulate pollution (PM2.5) increases mortality and morbidity andreduces human capital formation and worker productivity. As a consequence, high levels of particulate pollution mayadversely affect economic activity. Using a novel dataset of changes in the annual gross domestic product of Indiandistricts, this paper investigates the impact of changes in the level of ambient PM2.5 on district-level gross domesticproduct. Using daily temperature inversions as an instrument for pollution exposure, this paper finds that higher levelsof particulate pollution reduce gross domestic product. The effect is non-trivial—the median annual increase in thelevel of PM2.5 reduces year-to-year changes in gross domestic product by 0.56 percentage points.

Suggested Citation

  • Behrer,Arnold Patrick & Choudhary,Rishabh & Sharma,Dhruv, 2023. "Air Pollution Reduces Economic Activity: Evidence from India," Policy Research Working Paper Series 10515, The World Bank.
    • Handle: RePEc:wbk:wbrwps:10515
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