The haze's detrimental effect on the economy

The detrimental effect of haze on the economy

The haze's detrimental effect on the economy

Since last Friday (29 September), there have been reports of unhealthy air quality in some Peninsular Malaysia and western Sarawak areas.

According to the Department of Environment, the poor readings on the air pollution index (API) are because of the forest fires in southern Sumatra and central and southern Kalimantan, Indonesia.

Readings on the API that fall between 101 and 200 are harmful.

As haze returns to the clouds of Southeast Asia, so do the costs of dealing with and fixing the problems caused by international haze.

The cost of the haze in 2019 is still unknown. Still, suppose Southeast Asian countries reflect the earlier years. In that case, they might get an idea of how haze can be detrimental to the economy.

1. Reduces productivity.

Epidemiological studies show that fine particulate matter, which is the leading cause of haze, relates to diseases of the heart and lungs and even death. For every 10 g/m3 increase in fine particulate air pollution, the total death rate, cardiovascular death rate, and lung cancer death rate all go up by about 4%, 6%, and 8%, respectively.

So, haze pollution, which is a form of air pollution, not only reduces labor productivity in agriculture, industry, and services by a lot, even slowing down transportation, but it also hurts the respiratory system, the cardiovascular system, emotional controls, and cognitive ability, which directly affects business profits, total factor productivity, and the quality of urban economic development.

2. Impacts foreign investors’ economic decisions.

Investors are also very worried about air pollution, especially foreign investors who have better standards for the environment where they work. Because of the heavy haze, major air pollution is like a dome over the city.

This discourages foreign capital investment and causes foreign investment to leave a city and go to places with less air pollution. Many Fortune 500 companies in China have offices in Shanghai, Shenzhen, Guangzhou, Hangzhou, and other areas with better environmental governance, where R&D design, green innovation, and headquarters grow together.

3. Causes economic fluctuations

So, in general, the most direct effect of haze pollution on economic fluctuations is that it affects average production, daily life, and worker productivity, which leads to brain drain and makes environmentally sensitive foreign businesses less attractive. Because of this, air pollution can slow economic growth and cause local economies to stop growing.

Pollution from the haze and economic changes are terrible, mainly because they hurt business success and keep foreign investors from coming in.

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