Air Pollution and Economic Activity

Research Objective

Nitrogen Dioxide (NO2) is a byproduct of combustion and its concentration in the atmosphere has been used as a measure of economic activity ​1​. The short atmospheric life of NO2 (less than a day) means that densities are closely correlated to emissions ​2​. Global concentration of NO2 is available through satellite remote sensing datasets making it a valuable resource for many data-poor countries.

Our hypothesis is that NO2 values can be used to supplement other variables such as Nightlights to show changes in economic activity, especially in countries where frequent, subnational GDP values are not available. The research objective is to ascertain the relationship between NO2 and economic activity.

Background

The usage of nitrogen dioxide data as a proxy for economic trends is relatively new compared to other indicators such as nighttime lights which have been extensively used to track GDP​3​. NO2 data is easily accessible and available globally through satellite imagery. Studying the nuances of its relationship to economic activity could benefit economic monitoring in data-poor countries. Currently, we propose two directions to study this relationship further – monitoring NO2 from industrial production and mobility.

Industrial Production contributes to economic activity. Industrial production refers to the output of industrial establishments and covers sectors such as mining, manufacturing, electricity, gas and steam and air-conditioning. Most of these activities produce NO2 as a byproduct. There is existing research, albeit limited, that shows that NO2 correlates with industrial production ​4​.

Economic activity and people’s mobility are highly intertwined ​5​. Research has also shown that NO2 and mobility are highly correlated ​6​. This relationship between pollution, transportation and the economy was explored especially in economic trend monitoring studies after COVID-19 ​7​.

These two research directions were chosen because they are large contributors to NO2 and the economy. Additionally, there is publicly available data and data through the Development Data Partnership at the World Bank for tracking industrial pollution and mobility.

Research questions

What are the factors that influence the production and measurement of NO2?

Can we attribute NO2 levels from satellite imagery to its main contributors of Industrial Pollution and Mobility spatially and temporally?

What are the methods and datasets we can use to validate the relationship between NO2 and economic activity?

What are the limitations and assumptions of using Air Pollution, along with nighttime lights to study trends in economic activity?

Case Studies

Baghdad: The Baghdad Transportation Planning team has been working with the Data Lab to use alternate data sources that can inform investments in transportation planning. This proposal allows access to Waze data (Jams) and NO2 data. This team would like to understand the ‘social cost of congestion’.

Ethiopia: The Ethiopia Country Economists’ Office has been working with the Data Lab to combine insights from Nighttime Lights and Air Pollution to identify any changes in economic activity because of recent economic reforms.

All these case studies rely on alternate data for ‘additional’ insights that can supplement their main data sources. It is ideal to be using these two countries for the analysis because the Country Office Economists would likely be interested in using the insights for their reporting.