An indicator species is a living organism whose presence or absence tells us about the conditions in a habitat. Different species tolerate pollution to different degrees, so the community living in a place can be used as evidence of how polluted it is.
In water, bloodworms and sludgeworms survive when there is little dissolved oxygen, for example below a sewage outflow where bacteria use up the oxygen. Finding them in large numbers, with few other animals, suggests polluted water. Freshwater shrimps and stonefly nymphs need a lot of dissolved oxygen. If they are present, the water is probably clean.
In air, lichens are used. Many lichens are very sensitive to sulphur dioxide. Crusty lichens can survive some pollution, leafy lichens need cleaner air, and bushy lichens only grow where the air is very clean. Black spot fungus on rose leaves also grows poorly in air containing sulphur dioxide, so roses with black spot suggest cleaner air.
To evaluate this method: it is cheap and quick, and it shows the effect of pollution over a long time, unlike a single chemical test. However, it only gives a rough, qualitative result, it does not say which pollutant is present, and other factors such as temperature or the type of rock or tree bark can also affect which species live there.