The Air we Breathe: Estimates of Air Pollution Extended Genuine Savings for Europe

This paper constructs measures of Genuine Savings (GS), the leading economic indicator of sustainable development, for 28 European economies from 1990 to 2016. The World Bank publishes GS estimates for most countries in the world. The World Bank's estimates are extended to include local air pollutants (sulfur dioxide, non-metallic volatile organic compounds, nitrogen oxides and ammonia), on a country-specific basis. The extended pollution damages have a sizeable impact, even for highly developed economies. As many as 11 member states signaled persistent unsustainable development compared with just two in the equivalent World Bank dataset. Overall, it appears economies with higher levels of per capita national income and those more open to trade tend to hold higher savings rates. Findings of negative savings, an indicator of unsustainable development, were concentrated in the former communist regimes of Eastern Europe.