Around four in 10 Americans live in places where smog can impact their health. Children and teens are especially vulnerable to higher levels of ozone in the air associated with smog. According to the American Lung Association, more than 32 million children live in U.S. counties that received a grade of "F" for air pollution.

While air quality in the U.S. has improved over the last decade, the health of many children remains at risk. If you live in an area with smog or other forms of air pollution, here are three ways your kids can be harmed.

Source: Wikimedia Commons.

1. Asthma
More than 7 million American children have asthma. Close to 3 million of them live in counties with very poor ratings for air pollution. Incidents of asthma attacks and resulting hospitalizations are higher in these areas.

Not only does smog aggravate asthma in children who already suffer from the disease, some research points to the increased likelihood that smog can cause the onset of asthma. The Southern California Children's Health Study found that some children were diagnosed with asthma during adolescence due to higher ozone levels in the air.

2. Reduced lung function
Prolonged exposure to smog and other forms of air pollution can result in reduced lung function in children. The lungs aren't fully developed until adulthood. Kids who spend a lot of time outside in areas with air pollutants are more likely to have underdeveloped lungs.

Research found that children in more polluted areas had lung capacity of 20% less than what was expected for their age. That's similar to results from kids who lived in homes where their parents smoked. Another study concluded that living just four years in a region with high ozone levels associated with smog was linked to reduced lung function and other respiratory problems.

3. Cancer
Studies now show that smog could even be connected with rare forms of cancer in children. A presentation at the American Association for Cancer Research in April noted that higher exposure to traffic-related air pollution increased the odds of children developing cancer.

This research, conducted by scientists at UCLA, examined data from 3,950 children born between 1998 and 2007 who were diagnosed with cancer before age six. The scientists used a modeling program to determine how much air pollution each child was exposed to prior to developing cancer.

Living in highly polluted areas increased the likelihood by 4% that a child would be diagnosed with acute lymphoblastic leukemia. The risk level jumped by 17% for cancers of the ovaries, testicles, and other organs, and 14% for eye cancer. At this point, though, the research only establishes a correlation between smog and cancer rates. A direct cause-and-effect linkage has not yet been documented.

On the move
These findings could make some parents prefer to live in areas with cleaner air. If you're looking for clean parts of the country, try Florida or the Dakotas. According to the American Lung Association's "State of the Air" report, the cities with the cleanest air quality in the nation were Bismarck, N.D.; Cape Coral-Fort Myers, Fla.; Palm Bay-Melbourne-Titusville, Fla.; and Rapid City, S.D.

Of course, even relocation wouldn't undo the damage inflicted on children who have already developed asthma or other conditions as a result of smog. There is some good news, though.

Several companies are already on the move in working to develop more effective treatments for conditions linked to smog -- especially asthma. Array BioPharma (ARRY), for example, recently reported positive results from a mid-stage study of experimental asthma drug ARRY-502. The drug achieved the study's primary endpoint of statistically significant improvement in a key measure of lung function called Forced Expiratory Volume in one second, or FEV1.

Sanofi (SNY -2.33%) and Regeneron Pharmaceuticals (REGN 0.29%) also have a new asthma drug in development. In May, the companies announced good results from a mid-stage study of dupilumab. Patients with moderate-to-severe, persistent asthma who took the drug experienced 87% fewer asthma exacerbations than did patients receiving placebo.

Investing angle
Because we serve the interests of individual investors, The Motley Fool always looks at the investing angle with any story. With that in mind, all three of these companies developing new asthma drugs look like solid picks.

Sanofi is the largest of the group and provides a nice 2.5% dividend yield. Regeneron has rewarded investors with a year-to-date gain of almost 50%. Array BioPharma performed even more impressively so far in 2013, with gains of around 60%.

There is another type of investment, though, that could benefit even Americans who aren't interested in the stock market. Lowering levels of ozone to 60 parts per billion could produce between $35 billion and $100 billion in health and economic benefits by 2020, according to the Environmental Protection Agency.

More importantly, accomplishing this goal could save 4,000 to 12,000 lives and prevent 21,000 hospitalizations and 58,000 asthma attacks each year. Those are the kinds of returns that could help all Americans breathe easier.