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The Peninsula

Fine Dust Impedes South Korea’s Economic Growth

Published April 26, 2019
Category: Current Events

By Yeaji Nam

South Koreans are suffering from record-setting air pollution. Among the OECD member countries, South Korea recorded the second highest ultra-fine dust levels in 2018. In addition, Seoul was ranked first on poor air quality among the major capital cities around the world.

This level of air pollution is a major threat to public health. It will also hinder President Moon’s objective of boosting South Korea’s economy.

The World Health Organization (WHO) defines air pollution as an environmental health risk. In the short term, the effects of air pollution cause eye irritation, coughing, and sneezing. However, long-term exposure to particulate matter can cause serious illnesses. These include heart disease, lung cancer, and respiratory diseases like asthma.

The OECD reported in 2016 that South Korea recorded the highest premature mortality rate among the OCED countries due to airborne particulate matters and ozone pollution.

In response to fine dust, local governments and authorities are investing heavily to improve the country’s air quality. For example, the Seoul Metropolitan Government asked the central government for monetary assistance to pay for a 450 billion won ($386 million) program to overcome a surge in fine dust. Also, Korea Rail Network Authority announced plans to spend 22.2 billion won ($18 million) to inspect and replace the old equipment, 2.5 billion won ($2.15 million) to clean tunnels, and 15.4 billion won ($13.26 million) to improve air quality in subway stations in 2019.

In addition to being a budgetary burden, the economic cost of air pollution is significant. According to Hyundai Research Institute, the economic cost of fine dust was more than 4 trillion won ($3.4 billion) in 2018. An estimated 150 billion won ($136.6 million) is lost per day in consumer spending because people are staying indoors.

OECD estimated that the fine dust crisis will cause 20 trillion won ($20 billion) worth of damage to the Korean economy by 2060 because of the socio-economic circumstances such as loss of labor capacity and high costs on providing health care.

The Moon government cannot afford to wait to resolve the issue. The Korean economy may be less capable of handling these burdens in the future. According to the Korea Development Institute, the country’s exports declined by 19 percent in 2018. Notably, the export of Korea’s leading product – semiconductors – registered a negative growth rate of 29.7 percent in 2019.

The Moon government seeks additional funds in the supplemental budget for 2019 to deal with the fine dust crisis. The Finance Ministry noted that the existing budget is insufficient to address the fine dust issue, and has asked for 2 trillion won ($1.7 billion) to replace decrepit cars and facilities; increase the availability of hydrogen-powered and electric motor vehicles; acquire fine dust measuring improvement; among others.

The Moon administration is juggling other economic policy priorities such as creating more jobs. However, the government should place the fine dust issue as its top priority. The long-term damage to public health and the economy may outstrip any benefits gained from channeling investments elsewhere.

Yea Ji Nam is currently an Intern at the Korea Economic Institute of America. The views expressed here are the author’s alone.

Photo from user taylorandayumi on Wikimedia Commons.

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