Air Pollution

Ricardo air quality and economic expertise helps UK Government assess damage caused by air pollution

11 Jan 2023

Our world-leading expertise in air quality modelling and economics has guided the update to UK Government air pollution damage costs: a critical tool used to inform the development of air quality policy to protect human and environmental health. Here, David Birchby, Associate Director – Economics at Ricardo, who is the lead economist on the project, explains its importance.
“Ricardo has worked closely with the UK Government’s Department for Food, Energy and Rural Affairs (Defra) and the wider Interdepartmental Group on Costs and Benefits (IGCB) to update its air pollution ‘damage costs’. Air pollution can have damaging impacts on human health, productivity, amenity and the health of the environment. These detrimental impacts have associated economic and/or social costs (known as external costs or externalities) which we can quantify and to which we can attach a monetary value. Damage costs combine estimates of the different impacts associated with an emission of air pollutant, and we summarise these in a simple-to-use pound-per-tonne value.” 
“As part of this project that we have undertaken for Defra we updated the damage costs to reflect recent improvements in the underlying evidence base, including three key changes. First, changes in our understanding of how emissions, for example the pollution directly coming out of vehicle exhaust pipes or the stacks of fossil-fuel power generation, then translate into resulting concentrations: in other words, the general levels of pollution in the atmosphere to which people and the environment are exposed. Secondly, changes in our understanding of how exposure to different levels of pollutants affects human health. Thirdly, defining new damage costs for emissions from rail in different geographical areas. The effect has been to update the estimates of damage associated with the emission of air pollutants, for example, the damage associated with emissions of nitrogen oxides (NOx) and sulphur dioxide (SO2) are now 13% higher than previous estimates.”
“Damage costs play a critical role in the design and development of air quality policy through their use in policy appraisal: they form part of the HM Treasury’s seminal Green Book guidance on how to appraise policies, programmes and projects across the UK. Damage costs allow the impacts of air pollution to be quickly and robustly expressed in monetary terms, so the benefits of reducing air pollution through abatement measures can be readily compared to the costs to understand which measure, policy or abatement approach offers best value-for-money. This update to the damage costs is timely as the UK Government and Devolved Administrations continue to reflect and revise their air quality policy. For example, in December 2022, Defra laid the statutory instruments setting the long-term environmental targets for fine particulate matter, (PM2.5) in England, and damage costs will have been used to shape this change.”
“Damage costs are widely used across UK Government appraisal and beyond, and the outputs of this work will play a critical part in the development of effective environmental policy, both related to air quality and in wider areas, such as climate change where air pollution can often represent a key secondary benefit to greenhouse gas emission reduction. As Ricardo’s corporate mission is to create a safe and sustainable world, we are honoured that Defra chose to continue to entrust this seminal project to us. We have the longest-established specialist air quality team in the world and, with over 130 experts, one of the largest. This, combined with the strength of our economics team, allows us to provide a market-leading position to deploy best practice tools and methods to support effective design and assessment of air quality policy.”
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