With air pollution reaching unsustainable levels, in India the catalyst for change is hidden in clear sight and the change will have a wider impact on society than many realise. What lessons can be drawn from China and London’s Great Smog and how will India be different?
“Hell is a city much like this… a populous and smoky city![i]”
The quote could be from Delhi where its chief minister called the city a “gas chamber”[ii], or Beijing in 2013 or even Tokyo in 1960. But, the quote is from The Telegraph on December 5, 1952 reporting on the Great Smog of London.
India is currently in the midst of a smog problem. Air quality levels are 'hazardous' according to the World Health Organization[iii], a situation which other countries have experienced in the past. As countries develop, their power stations burn more coal, their middle classes pollute with their newly purchased cars, and farmers continue to burn agricultural waste.
A catalyst can change attitudes to pollution overnight
When conducting ethnographic studies in EMs, farmers tell us that they are concerned about issues that affect their crop yields, such as the quality of soil or access to water. However, they burn their crop residues because they do not see air quality impacting their crops.
When things get bad, a catalyst causes fast action – something that makes people realize the importance of taking care of their environment and their health. At the height of China’s 2013 smog problems, social media was filled with complaints about air quality. Even state supported media was critical, while foreign media dubbed it “Airpocalypse.”[iv] This onslaught pushed the Chinese government to divert attention to the environment instead of the singular pursuit of economic growth. In 1950s' London it was the spike in deaths caused by respiratory problems.
Is India’s love of cricket a catalyst that could make them focus on air pollution? On December 3, 2017, a cricket Test Match in Delhi between India and Sri Lanka was repeatedly interrupted due to players experiencing breathing difficulties and continuous vomiting from the pollution.
Events like this bring attention to the issue and speaking to millennials shows the changing attitudes. Suraj, a 21-year-old student living in Pune who want to become an engineer. When we met him in May he had no interest in the environment. In early November he contacted us and said he changed his mind after seeing this video, and that something urgently needed to be done about pollution.
With these levels of visibility, even the sharpest of drivers would think twice about their ability to stop in time and avoid an accident.
Suraj is typical of the changing attitudes amongst India’s millennials. They see opportunity in their country and they want to capture their fair share of it. They are self-confident but worry about external factors, such as a health incident that puts an end to their dreams and stops them advancing in the social ladder.
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Delhi can learn from methods and technologies used by China[v], Japan and even 1950s London to mitigate its pollution problems.
From a ban on the sale of fireworks during the festival of Diwali[vi] to bringing forward from 2020 to 2018, petrol and diesel compliance with Euro VI standard, India has already implemented several laws to reduce smog.
Looking beyond electric cars
Realizing that a shift to sustainable environmental policies is a question of “when” rather than “if” gives investors the chance to capitalize on this inevitable shift.
Electric vehicles and renewable energy are two most obvious winners. Many of the country’s automakers are shifting their focus not just to producing electric vehicles, but in particular to developing them for an affordable price-point. With only 11% of India’s households have a car today[vii] this growth trend is recognised by many.
But if we look at the example of China, the Indian consumer is more than a decade away from the inflection point, around $5,000 GDP per capita, where car ownership takes off. An earlier and more long-term and yet unrecognised winner is the fitness sector. Middle classes as they get wealthier view exercising as progressive and important to a longer, healthier, productive live. However, in countries with high pollution, exercise has the opposite effect as people breath deeper into their lungs through their mouth increasing health risk rather than reducing it[viii].
With cleaner air exercise become less strenuous as you are not irritating your lungs with every breath. Obvious long-term winners will still be the likes of Nike and Adidas, but in the case of India they are out of reach in terms affordability. Cheapest Nike Air on amazon.in is $187 compared to running shoes from Performax, a local brand owned by Reliance Industries, for $23. Millennials are favouring local brands that can provide value for money and even national pride.
The change to cleaner air is inevitable. And if smog-induced car crashes are not enough, not being able to watch their favorite sport might be the catalyst to address air pollution, which will be unleashing a whole new trend.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of Trinetra Investment Management LLP and are subject to revision over time. Trinetra is authorised and regulated by the Financial Conduct Authority in the United Kingdom.
References:
[i]http://www.telegraph.co.uk/news/earth/countryside/9727128/The-Great-Smog-of-London-the-air-was-thick-with-apathy.html
[ii]Neuman, S. (2017). New delhi chief minister calls india's smog-choked capital A 'gas chamber'. Washington: NPR. Retrieved from http://ezproxy.library.ubc.ca/login?url=https://search-proquest-com.ezproxy.library.ubc.ca/docview/1962044658?accountid=14656
[iv]Zhang, D., Liu, J., & Li, B. (2014). Tackling air pollution in China-what do we learn from the great smog of 1950s in LONDON. Sustainability, 6(8), 5322-5338. http://www.mdpi.com/2071-1050/6/8/5322
[v]Shi, H., Wang, Y., Chen, J., & Huisingh, D. (2016). Preventing smog crises in china and globally. Journal of Cleaner Production, 112, 1261-1271. 10.1016/j.jclepro.2015.10.068
[vi]https://www.npr.org/sections/goatsandsoda/2017/10/17/558067395/fear-of-toxic-smog-leads-india-to-limit-diwali-fireworks
[vii]http://www.livemint.com/Politics/Yd2EAFIupVHDX0EbUdecsO/One-in-three-households-in-India-owns-a-twowheeler.html
[viii] https://www.mayoclinic.org/healthy-lifestyle/fitness/expert-answers/air-pollution-and-exercise/faq-20058563
[ix] https://www.theguardian.com/cities/2017/feb/13/tipping-point-cities-exercise-more-harm-than-good