Blog 1 April 2026
At The Economist’s recent Sustainability Week in London, I joined business leaders and policymakers exploring how to align planet and profit – a challenge often framed around climate change alone. Yet tackling air pollution is one of the most powerful and undervalued ways to boost productivity and drive long‑term economic growth.
For example, the UK’s recent commitment to meet stronger air quality standards by 2030 deserves more attention than it received. This policy decision could deliver enormous economic returns. The UK lags 20% behind the US on productivity and sits in the bottom half of the OECD league tables. Meeting the new particulate matter (PM₂.₅) standard by the 2030 deadline could save UK businesses £1.6 billion and 3 million working days every year, on top of the avoided costs to the NHS and social care systems. These are the kinds of gains governments should prioritise in their economic growth strategies.
Air pollution hampers economic productivity
According to a recent World Bank study, the health impacts from air pollution cost $6 trillion each year, or 5% of global GDP. Unfortunately, that figure is set to increase. The OECD estimates that air pollution already leads to around 1.2 billion lost workdays annually and projects that figure to rise to 3.7 billion by 2060 without stronger action.
As well as work absences from illness, air pollution also causes disrupted operations, lower yields, and higher insurance and healthcare costs. The drag is visible across multiple sectors:
- A study on tourism in China found that a 1% pollution increase in the Air Quality Index was associated with a 1.25% drop in tourist numbers.
- In agriculture, ground-level ozone reduces yields of staple crops (such as wheat, rice and maize) by 5–15% in polluted regions, causing as much as $26 billion in annual losses.
- Particulate matter pollution was found to reduce solar power output by 20% in China and 29% in India, weakening renewable energy generation.
Clean air pays for itself
Investments in clean air will deliver some of the strongest returns in public policy through avoided illness, higher productivity and lower public spending. We’ve already seen this in Europe, the US and India. Recent OECD analysis attributes around one third of productivity growth across the EU between 2011 and 2022 to improvements in air quality. The US Clean Air Act was found to deliver benefits more than 30 times greater than its costs. In India, the Gujarat particulate trading scheme, evaluated by the University of Chicago’s EPIC programme, shows benefits exceeding costs by 25:1.
More gains are yet to come for countries and regions that are setting ambitious clean air standards. The European Commission recently revised their Ambient Air Quality Directive to include better standards for outdoor air, which countries need to meet by 2030. Their impact assessment estimates benefit–cost ratios between 6:1 and 27:1, depending on the policy scenario.
As the majority of outdoor air pollution comes from burning fossil fuels, many actions to tackle climate change also reduce air pollution, and vice versa. Astoundingly, this has not historically been factored into the cost-benefit analyses for climate action plans. As our report shows, factoring the economic gains from air quality co-benefits into climate cost-benefit analyses makes a third more measures economically attractive, increasing the net positive abatement potential from 16 gigatonnes of CO2e abatement per year to around 24 gigatonnes.
These returns on investment could be multiplied even further if governments take a joined-up approach to climate and air quality policy – actively maximising for both at the same time. The World Bank’s latest modelling shows that integrated climate and air quality policy could reduce combined policy costs by around 40%.
With such huge gains at stake, investors are now beginning to take note. Last year, investors representing over $795 billion called for stronger corporate action on air pollution and improved pollutant disclosure — aided by frameworks such as the EU’s Corporate Sustainability Reporting Directive and India’s Business Responsibility and Sustainability Reporting. This should focus business leaders’ minds on reducing the health burden of air pollution that is collectively harming productivity across the economy.
The air quality investment gap
Yet, despite overwhelming evidence of economic returns, air quality remains massively underfunded. Air quality projects received just 1% of international development funding between 2019 and 2023. By contrast, funding for projects prolonging fossil fuel use grew by 80% between 2022 and 2023.
Beyond underinvestment, government structures often work against integrated action. Environment ministries may lead on air quality, but the savings accrue to health budgets and the productivity gains to labour and industry. We need to change that — and support more collective action across government — by making the evidence clear that clean air is a no brainer for investment across the board, and a core pillar of economic policy.
What policymakers can do
First, governments should embed air quality into macroeconomic and fiscal planning, just as they do for inflation or unemployment. That means including pollution in productivity strategies, growth diagnostics and spending reviews.
Second, they should design integrated climate–air quality strategies, so that investment in clean energy, transport and buildings maximises both emissions reductions and local health benefits.
Third, policymakers need to create stable regulatory frameworks that unlock private investment. The success of the Gujarat scheme shows what is possible when market signals and enforcement align.
Finally, governments and development banks must mobilise finance for air quality measures, while using blended finance to bring in private capital.
How Clean Air Fund is helping
We are working to put robust economic evidence into the hands of those making financial and policy decisions. Through the Our Common Air Commission, we helped build a global economic case for treating clean air as an asset, and set out practical pathways for action.
We’re supporting finance ministries and investors with credible, country-specific analyses — including studies in the UK, India and Bulgaria — that quantify how clean air can raise productivity, cut healthcare costs and support more resilient growth.
We are also engaging with development finance institutions to mobilise capital and support integrated climate–air quality strategies globally. Clean air is an economic strategy hiding in plain sight and we will continue to demonstrate why it is one of the smartest investments governments can make. Watch this space for more coming up.
