The Cost of Air Pollution:
A Meta-Analysis of Air
Quality Valuations
Jennifer Chirico, MPH
Douglas Noonan, PhD
APHA Conference
November 5, 2007
Outline
•
•
•
•
•
Introduction and Background
Data
Analysis
Findings
Conclusion
Introduction and Background
• Air Quality
– Poor air quality has significant health, environmental,
and economic impacts
– Air quality is a public good (“non-market good”) and
difficult to value
• Significance to public policy
– How air quality is valued in society is a significant
concern to policy makers as they make decisions
about the appropriate means that should be allocated
to air quality improvement
Introduction and Background
• Meta-Analysis (“study of studies”)
– The purpose of a meta-analysis is to measure relationships
between reported environmental valuation estimates for goods
and non-market goods
• Types of air quality valuation studies included in this
meta-analysis:
– Revealed preference
• e.g., Hedonics: How much do people reveal their air quality
preferences; may pay more to live in an area with better air quality
– Stated preference
• e.g., Contingent Valuation: Surveys that ask individuals/households
“How much would you be willing-to-pay for a 50% reduction in air
pollution?”
Introduction and Background
• Several Air Quality Meta-Analysis Studies have been
conducted since 1995
– Vassanadrumrongdee et al. (2004). “Meta-analysis of
contingent valuation studies on air pollution-related
risks.”
• Focus is on contingent valuation method (CVM)
studies and the health effects of air pollution
– Delucchi et al. (2002). The Health and Visibility Cost
of Air Pollution: A Comparison of Estimation Methods.
• Focus in on health and visibility costs using
hedonics and CVM studies
– Smith, V.K. & Huang, J. (1995). “Can Markets Value
Air Quality? A Meta-Analysis of Hedonic Property
Value Models.”
• Focus in on Hedonic Valuation studies
Purpose and Research Question
• Research Question:
– How much are people willing-to-pay for air quality
improvements?
• Purpose/Objectives:
– To provide a statistical summary of air quality
valuations conducted around the world
– To examine stated and revealed preference studies
that measured air quality against health costs and
property values
– To provide insights into the costs to society of air
pollution and how much people are willing-to-pay for
air quality improvements
Data
• 104 studies found using Georgia Tech library databases
(including UGA and GSU), Environmental Valuation
Research Inventory (EVRI), Research Papers in
Economics (RePEC),and Google scholar
– 19 were dropped due to missing information
– 34 were not in print or had a cost associated
– 1 was dropped due to language barrier (not available
in English)
– 4 were meta-analyses
– 46 articles were examined
• The sample size is defined as the number of willingnessto-pay observations (n=309)
Data
Variable
Air Quality
Definition
Mean air quality level (e.g., PM10, Ozone, TSP)
Change in air quality,
% change in air quality measure (e.g., 50% reduction in ozone)
Population
Population of study area
Income
Sample income per household
Country
Study site
Year
Year published
Year Conducted
Year the survey was conduction/data gathered
Peer-reviewed
Was the article peer-reviewed?
type of valuation,
Hedonics, CVM, 2-stage hedonic, compensating differential, benefit transfer
Funder
Who funded the study (G=gov’t, N=nonprofit, A=school, W=World Bank, O=other)
Good
The good the author(s) are valuing (e.g., improving air quality by 50%)
Sample Size,
Size of the author(s) study sample
elasticity
Income elasticity
Model
Type of model used (e.g., R=regression, L=logit, P=probit)
demographic groups
# of demographic variables in study
survey
Type of survey (e.g. phone, mail, door-to-door
third world
Was the study conducted in a third world country?
Data
• Number of studies (46)
– Revealed preference studies
• 30 articles
– Stated preference studies
• 14 articles
– Combined stated and revealed preference studies
• 2 articles
• Number of observations (n=309)
– Revealed preference observations
• 190 observations
– Stated preference observations
• 119 observations
Y
e
19ar
19 70
19 71
19 72
19 73
19 74
19 75
19 76
19 77
19 78
19 79
19 80
19 81
19 82
19 83
19 84
19 85
19 86
19 87
19 88
19 89
19 90
19 91
19 92
19 93
19 94
19 95
19 96
19 97
19 98
20 99
20 00
20 01
20 02
20 03
20 04
20 05
06
Number of Studies
Analysis
Published Studies
7
6
3
Conducted Studies
9
8
CAA
Amendments
1977
5
CAA
Amendments
1990
4
CAA 1970
2
1
0
Year
Researchers and Funders
Distribution of Researchers
Number of Sudies
30
28
25
20
15
10
6
3
5
4
3
2
0
A
ca
de
m
ic
,N
G
U
O
,a
nd
an
d
nk
no
w
n
N
G
ov
't
G
O
ov
't
G
ca
de
m
ic
an
d
A
A
ca
de
m
ic
ov
er
nm
en
t
G
A
N
G
O
ca
de
m
ic
0
Number of Studies by Funders
25
20
20
Number of Studies
• Distribution of Researchers
– 28 studies conducted by academic
researcher(s)
– 3 studies conducted by NGO
researcher(s)
– No studies conducted by
government researcher(s)
– 11 combined researcher studies
– 4 studies did not indicate
researcher affiliation
• Funders of Studies
– Government funded 20
– NGOs funded 6
– University 1
– Combined 4
– Unknown 15
15
15
10
6
5
3
1
1
0
University
NGO
Government University Government
and NGO
and NGO
Unknown
B
el
gi
u
B m
r
B a
ul zi
g l
C ari
an a
ad
C a
hi
le
C
D hi
en n
m a
a
E rk
g
Fr yp
G an t
er c
m e
G any
re
ec
In In e
do di
ne a
Lu
s
xe Ko ia
m re
bo a
M urg
ex
N Mo ico
e t ro
he c
rl co
P and
or s
tu
g
S al
S pa
w in
ed
Ta en
Th iw
ai an
la
nd
U
K
U
S
Number of WTP Observations
Studies by Country
Number of Studies per Country
25
20
15
10
5
0
25 countries represented, including
10 developing countries
el
gi
u
B Bra m
ul z
i
C gar l
a i
C nada
an a
a
C da
h
D Ch ile
en in
m a
Egark
F y
G ran pt
er c
m
G ane
re y
e
In I ce
d o nd
ne ia
Lu
xe Ko sia
m re
b a
M ou
N Mo exi rg
et r c
he oc o
r c
Po l an o
rt ds
ug
S a
Sw pa l
e in
Ta de
Th iw n
ai an
la
nd
U
K
U
S
B
Number of Observations
Stated and Revealed Preference
Studies Varied by Country
SP/RP Observations Per Country
140
120
100
80
60
40
20
0
Revealed Preference
Stated Preference
Types of Air Measures
Number of Observations by Air Measure
100
Number of Observations
90
80
70
60
50
40
30
20
10
0
Lead
NO2
Ozone
PM10
SO2
TSP
CO
Additional Air Measures
• There were some additional observations
for non-criteria air pollutants
– Visibility
– Black fallout days
– Cooling degree days
– Heating degree days
– Days with unhealthy air
– Odor
– Noise
59%
10
-1
9%
20
-2
9%
30
-3
9%
40
-4
9%
50
-5
9%
60
-6
9%
70
-7
9%
80
-8
9%
90
-9
10 9%
019
20 9%
029
30 9%
039
40 9%
049
9%
04%
Observations
Change in Air Quality
Number of Observations per Change in Air Quality
120
100
80
60
40
20
0
Sample Size of Studies Reviewed
Number of Observations
Observations per Sample Size
100
90
80
70
60
50
40
30
20
10
0
U
e
nd
00
1
r
99
4
00
1
99
9
00
5
00
10
99
9
1
00
20
99
9
2
Revealed Preference
00
30
99
9
3
00
40
Stated Preference
99
9
4
O
ve
00
0
r5
p
br
Tw
iu
m
oSt
ag
e
H
ed
on
ic
ili
on
ic
He
d
n
if f
ts
m
riu
ili
b
qu
D
at
io
Va
lu
qu
Pa
rti
al
E
ra
lE
ge
nt
t in
G
en
e
Co
n
Co
s
Co
m
id
ed
Av
o
Observations
Local, Regional, or National?
Scale for different types of Valuations
80
70
60
50
40
30
20
10
0
Local
Regional
National
Survey Modes
Survey Mode for CVM Observations
Mail 6%
Intercept 3%
Phone 4%
Door-to-door
87%
Mail
Intercept
Phone
Door-to-door
Final WTP measures were converted to
annual estimates per household (2.5) based
on a 1% change in air quality
Revealed
Preference
Stated
Preference
Total WTP
Mean
$20.99
$48.89
$37.98
Median
$4.73
$10.13
Max
$141.31
$364
$364.31
Min
$.06
$.00
$.00
SD
$30.12
$79.50
$65.32
$7.67
el
gi
B um
B ra
ul zi
C gar l
an ia
a
C da
hi
C
D h le
en in
m a
a
Eg rk
F y
G ran pt
er c
m e
G an
re y
e
In In ce
do d
ne ia
Lu
xe Ko sia
m re
b
M
N o ou a
et r r
he oc g
r c
Po l an o
rt ds
ug
S a
Sw pa l
ed in
T e
Th aiw n
ai an
la
nd
U
K
U
S
B
Average WTP
Average WTP Across Countries
$400.00
$350.00
$300.00
$250.00
$200.00
$150.00
$100.00
$50.00
$0.00
Average WTP Per Country
Conclusion
• Stated preference studies have a higher WTP than
revealed preference studies
• The total mean WTP based on evaluations around the
world ranges from $0-$364
• This wide range of results demonstrates the difficulty in
valuing air quality
• These varying results make it hard for public policy
makers to determine the true value society places on air
quality
• Transferring benefit estimates to other locations can
yield confidence intervals based on the location’s unique
attributes
Questions???