Air Pollution

In this final section, we close by identifying where the most important gaps remain, organised around the four themes of the paper.

Measuring damages. The causal economics literature on air pollution damages has matured rapidly, but its geographic and concentration range remain severely constrained. The overwhelming majority of credibly identified studies come from China, India, Mexico, and the US, and most were identified at annual average exposures below 20 µg/m3. Extrapolating these estimates to South Asia and sub-Saharan Africa, where populations routinely face exposures five to ten times higher, requires making assumptions about the shape of the concentration–response curve across that range. Recent evidence on both mortality and cognition suggests assuming a linear shape is unlikely to hold: the mortality curve appears to flatten at moderate exposures through frailty selection and avoidance, while cognitive and productivity effects may remain steep or even accelerate. Identifying the shape of the C–R relationship at very high concentrations is therefore a first-order research priority. The method developed by Miller et al. (2025) for isolating dose–response shape using plume variation offers a template; extending it to LMIC settings where baseline exposures are an order of magnitude higher is technically demanding but scientifically essential. A related gap concerns the distinction between acute and chronic exposure. Most quasi-experimental estimates identify short-run effects; the long-run neurological, developmental, and mortality burdens likely dwarf these, but remain poorly identified in LMICs. Finally, the gap between ambient concentrations and personal exposure deserves more attention. Indoor air pollution monitoring and portable personal monitors are becoming affordable enough to deploy at scale, and studies that link individual-level exposure trajectories to outcomes will substantially sharpen damage estimates and benefit–cost calculations.

Defensive behaviour. The defensive behaviour literature has documented a consistent and somewhat sobering pattern: people respond to information about pollution, but the responses are often episodic, unequal, and insufficient to close the gap between ambient exposure and biological dose. Several important questions remain open. First, the evidence on alert systems is almost entirely from China, the US, Toronto, and Mexico City. Whether disclosure generates comparable behavioural responses in South Asian megacities, where pollution is high on nearly every day of the year, is unknown. The design question is acute: alerts calibrated to warn when pollution crosses a threshold may inadvertently signal non-alert days as safe, even when ambient levels remain harmful. Developing and evaluating alert systems suited to persistently high-pollution environments is a direct policy need. Second, the emerging literature on purifier adoption delivers a consistent message that standard market failures do not explain low uptake: credit constraints, misbeliefs, and information gaps have all been tested and found wanting as primary explanations, at least in the Dhaka household context. What does explain the low and inelastic demand for clean air among households that can apparently afford it remains an open question with significant implications for how we think about private versus collective solutions. Third, the literature on institutional investments in indoor air quality, in firms and schools, is growing quickly but is geographically concentrated. The school evidence from Pakistan and Italy adds important nuance about the conditions under which purifiers deliver gains, but the critical implementation challenge of sustained operation has received almost no attention. Understanding how to design contracts, incentives, or subsidy structures that ensure continuous use rather than intermittent deployment should be a priority, particularly given the large estimated returns.

Regulation. The regulatory economics of air pollution in developing countries is arguably where the evidence gap is widest relative to the policy need. The core insight from Section 4 is that poor air quality in many countries is not primarily a problem of absent regulation, but of ineffective enforcement given limited state capacity. This reframing has several implications for research. The causal effects of specific regulatory instruments remain poorly identified in LMIC settings. The experimental evidence from India’s emissions trading pilot (Greenstone et al. 2025b) is pathbreaking precisely because it is rare. More experimental and quasi-experimental evaluations of market-based, disclosure-based, and command-and-control instruments are needed, particularly in settings outside India and China. The literature on congestion pricing is similarly concentrated in a handful of European cities. Whether the large estimated effects from London, Milan, and Stockholm generalise to dense, lower-income cities with very different vehicle stocks, road infrastructure, and enforcement capacity is an open empirical question. The aggregator policy model piloted in Delhi offers a promising approach to accelerating vehicle fleet turnover without engaging individual consumers, but has not yet been rigorously evaluated.

Airsheds and coordination. The final frontier is explicitly multi-jurisdictional. Evidence from China and South Korea illustrates that air pollution regulation in one country can generate large health benefits in neighbouring countries, and that these cross-border externalities are not internalised in national regulatory decisions. Within countries, the same logic applies across states and cities that share an airshed. Designing regulatory institutions that internalise these spillovers is a difficult political economy problem, but the economics literature has barely begun to study it. What governance structures support airshed-level coordination? Under what conditions do bilateral or multilateral agreements on monitoring and standards emerge and hold? Do pollution markets, by creating a financial stake for all participants in accurate measurement and compliance, facilitate coordination across jurisdictions in ways that command-and-control regimes do not? These questions sit at the intersection of environmental and political economics, and the returns to answering them are large.

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