Of all the body cavities in contact with the outside world, the nose is probably one of the most hospitable: it is warm, very well aerated, moist and supplies unlimited quantities of bacterial food secreted continuously by the nasal mucosa (mucus contains quantities of glycoprotein and dissolved salts). In other words it is an ideal breeding ground for bacteria, which are always present.

Many of the common bacteria associated with humans are coloured, Staphylococcus aureus is a golden yellow, for example, and Pseudomonas pyocyanea (to give it its older, but more explicit name) is a shade of blue. Thus the green comes from the mixture of yellow and blue flora!

Normally these and the multitude of other organisms that are inhaled continuously into the nose are flushed out by runny mucus, which is swallowed. The bacteria are usually digested. However, if a situation arises where the flow of mucus slows down and then becomes much thicker in response to an infection of any kind, then the bacteria, in their ideal home, can multiply and produce the coloured mucus described.

Source - The NewScientist

You can actually use this as a judge of health and wellbeing. If your nasal mucus is clear, then that indicates that you're doing fine, you're healthy. If it goes green, then something is wrong. I have found that the mucus goes green about two to three days before the flu or other infections take over. So you have some advance notice, and if you rest a bit, you can actually take the edge off the infection.

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