Barriers to Public Investment in Ambient Air Quality in Low- and Middle-Income Countries

The purpose of this policy brief is to deepen the understanding of barriers to public investment in ambient AQ in LMICs, despite the growing political recognition of the harmful impacts. Public investment here refers to government-led investment financed through domestic public expenditure, sovereign borrowing, and external sovereign grants and loans. The analysis draws on findings from a four-month study based on desk reviews and key informant interviews with government stakeholders and multilateral development banks (MDBs) across 15 countries: Colombia, Egypt, Ethiopia, Ghana, Indonesia, Kenya, Liberia, Mexico, Mongolia, Pakistan (Punjab province), South Africa, Sri Lanka, Thailand, Uganda and Viet Nam. These countries were selected to reflect a range of income levels, regional contexts, and stages of AQ policy development across Africa, Asia and Latin America.

Key messages and recommendations:

The study identified nine key barriers that limit public investment in ambient AQ despite strong economic and health returns on investment. These barriers are interconnected and mutually reinforcing, though they vary according to the national, economic and political context of each country. The most binding constraints also differ across contexts, with some countries facing more acute challenges related to technical capacity and monitoring systems, while others are more constrained by fiscal pressures, fragmented institutions, political economy dynamics, or weak enforcement systems. 

In many cases, the main barriers were not a lack of AQ data or available financing but rather a lack of institutional capacity and coordination, technical knowledge, regulatory alignment and political will. There were also concerns that AQ response might reduce economic growth and exacerbate social risks. These matters means that AQ data is not translated into investable plans and policies, and the benefits of AQ are not adequately reflected in public strategies, plans and regulatory frameworks.

Taken together, these barriers suggest that sustained AQ investment depends not only on public finance, but also on stronger regulatory and enforcement systems, credible compliance obligations for major emitters, and pricing and fiscal incentives that shift investment decisions toward cleaner technologies and away from pollution-intensive activities. Existing subsidy structures, particularly fossil fuel subsidies and other incentives that favour polluting activities, can further distort investment signals while consuming substantial fiscal space. 

Public finance remains essential, but without the broader institutional, regulatory, fiscal and political conditions that shape investment behaviour, the mobilisation of both public and private investment is likely to remain constrained. 

To overcome these barriers, this study proposes coordinated priority actions for governments and international financing institutions to better build an investment pipeline for AQ solutions and embed the benefits of clean air into budgetary, regulatory and project decision making. Priority actions include strengthening the analytical and institutional foundations for AQ investment; embedding AQ into sector
planning, public investment systems and budget frameworks; strengthening regulatory and enforcement systems; reforming pricing and subsidy structures that distort investment incentives; and supporting upstream project preparation and catalytic financing mechanisms that can help crowd in larger flows of public and private investment.