Impacts and Sources of Air Pollution in Tbilisi, Georgia

Air pollution profoundly impacts welfare, causing more deaths globally than malnutrition, AIDS, tuberculosis, and malaria combined. In the Georgian capital, Tbilisi, air pollution levels exceed international standards and surpass levels in other cities in the region. The average monthly PM2.5 concentration in Tbilisi is 20 Micrograms per cubic meter, four times higher than the World Health Organization’s annual recommended limit. This paper uses multiple data sources — administrative data, satellite imagery, private real estate transactions, and traffic data — to estimate the impact of air pollution on the health and productivity of people in Tbilisi. It estimates that a 1 percent increase in PM2.5 levels corresponds to a 0.24 percent increase in respiratory hospitalization rates. A 1 percent increase in PM2.5 is also associated with a 0.2 percent decrease in rental prices. All the estimates are lower bounds of the total impact of air pollution as they only account for short-term consequences. The study shows that traffic and industrial activity are significant drivers of air pollution in Tbilisi. The paper also estimates the positive co-benefits of potential carbon pricing policies from air pollution reduction. Adopting a carbon tax of $25 per ton would reduce hospitalizations by 0.44 percent per district by 2036, while increasing rental prices by 0.38 percent.