Pollution is a byproduct of certain buildings in the SimCity series. Pollution lowers the aura of the surrounding area and affects what kind of buildings the Sims will build (or won't build) in polluted zones. There are 2 main kinds of pollution: air pollution and water pollution.
Air pollution is caused by dirty and manufacturing industries, certain power plants (such as coal and oil), traffic, and airports. It makes it hard for the Sims to breathe and deters them from developing in polluted zones.
Air Pollution Levels
There are 5 levels of air pollution.
If there is no air pollution on a tile, that means that the air is at its purest and the Sims will be happy to build any kind of building in a pollution-free zoned area.
This is great for building high density buildings and raising land value.
If the air pollution on a tile is low, things are just a little dirty. The Sims won't complain much, but the best buildings won't be built in low pollution.
Land value decreases a little, but still enough for some high density buildings
Once air pollution reaches high, Sims will begin to complain and your environmental advisor will begin to alert you to the growing problem. Most dirty industries will increase the problem.
It lowers land value a lot, meaning there are fewer residential and commercial buildings, particularly in higher densities.
It's starting to get hard to breathe for the Sims and most will want to stay away, especially residential and commercial.
Land value continues to lower, usually reaching low or very low.
Once the pollution level reaches hazardous, there could be problems. Introduced in SimCity 3000: Unlimited are toxic clouds that will form above Industrial zones and produce acid rain, destroying buildings, trees, and any city infrastructure.
Preventing air pollution
One way to prevent air pollution from getting too high is to activate certain city ordinances such as Clean Air Act in SimCity 4, which also reduces deamand for dirty industry. Another is to reduce traffic congestion. Trees also help remove air pollution and keeping your Sims educated will encourage high-tech industry to move in, replacing the old, dirty factories with new, clean buildings. Keeping filthy business deals out of your city helps as well.
Water pollution is caused by all types of industry except for High Tech, as well as power plants, and seaports. Water pollution can gunk up pumps and lower their working capacity. Standing water that is polluted has an obvious black tinge to it.
The effects of water pollution are obvious if the player queries a pump near a polluted area. The current work capacity of the pump with be lower than its maximum output, even if the pump is brand new. If water pollution gets to be too bad in too many places, Sims will complain.
Preventing water pollution
Like air pollution, water pollution has several city ordinances attributed to it as well. Another method of preventing water pollution is to build a water treatment plant. It has a maximum capacity of 60,000 gallons of polluted water to process and this number lowers as it reaches the end of its life, but it's a good way to clean your city's water grid.
Note that high water pollution levels will make it so things like water towers and water plants only produce 1t/month, instead of producing 1,500t for water plants or 600t for water towers. If the entire city were to become red with high levels of water pollution, even 2,000 water plants stationed in one area will only supply water to around 10 buildings.