1. The Cost of Air Pollution: A Meta-Analysis of Air Quality Valuations
Jennifer Chirico, MPH
Douglas Noonan, PhD
APHA Conference
November 5, 2007

2. Outline
Introduction and Background
Data
Analysis
Findings
Conclusion

3. 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

4. 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?”
Revealed Preference Theory
Uses behavior of individuals and communities to analyze their spending and income preferences
Looks for correlations between market behavior and non-market goods
Includes hedonics – property and rent models
break down housing components to see how much of where people live is attributed to air quality. You may pay more to live somewhere with better air quality/visibility
Also includes travel costs (demand curve to visit something, costs involved)
Averting costs – least common; e.g. spend money on air filters to avoid poor air
Stated preference
Ask people that preference through surveys
Using used in CVM. What would you be WTP for a change in AQ?
Choice experiment – which bundle would you pick? Rank order

5. 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
There are not many meta-analysis on air quality
These are 3 most recent air quality
Our study focuses on studies from 1978 to today and looks at both RP and SP and compares studies around the world.

6. Purpose and 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

7. 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 willingness-to-pay observations (n=309)
104 studies found through searches
Some of the ones that are difficut to find may be lower quality papers that are not readily availabe
GT library databases
Economic databases
Google scholar
For the 19 with missing info, we will go back and try to find that info to eventually include in analysis
Sample size = wtp observations

8. Data Variable Definition Air Quality
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?

9. 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

10. Analysis CAA Amendments 1977 CAA Amendments 1990 CAA 1970
Number of studies per year between 1971 and 2007
As illustrated, there are three big humps, or punctuaated equilibriums in 1981, 1998, These are when they were published, which is usually several years after the study has been conducted, so we can assume it is more like 1978, 1995, and 2004

11. Researchers and Funders
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
Number of studies by funders
Clearly govert agencies are the biggest funders of these studies
Followed by unknown.
If they didn’t specify who funded it, we left it as unknown, but most likely it was academic work since they were the biggest section of researchers. And they probably would have stated it if it was funded by someone else.

12. 25 countries represented, including
Studies by Country
This is per country
Obviously the US produces the most studies
China, Mexico and Thaiwan are about the same. Then Korea. The rest is probably 1-2 observations per country
25 countries represented, including
10 developing countries

13. Stated and Revealed Preference Studies Varied by Country

14. Types of Air Measures
There are six criteria air pollutants monitored by the epa.
Lead
No2
So2
Ozone
Pm10
Pm2.5
PM2.5 was not measured in any study, probably because it is the most recent to be monitored. Just started monitoring in late 1990s
TSP – total suspended particles use to be the measure for particulates and this measure was used for most of the older studies 1970s and 80s

15. 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
These were some additional observations that were kind of interesting outside of the basic criteria pollutants.
There were several for visibility,
I think 2 studies looked at smell
Some others were heat, humidity, rain, days of unhealthy air

16. Change in Air Quality Changes in air quality
How much willing to pay for a 50% reduction in one of the air quality measures mentioned.
Wtp 100 for a 50% reduction in ozone, smell

17. Sample Size of Studies Reviewed
Per sample size
Most fell between
But many in the category of just under 2000
Or above 5000

18. Local, Regional, or National?
Local is highest for both contingent and hedonics, followed by regional and national
Benefit transfer was mostly at national level

19. Survey Modes Surprisingly most were conducted door-to-door
May be because they were older studies. More recent one were conducted by mail.
Next mail

20. Final WTP measures were converted to annual estimates per household (2
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
$7.67
Max
$141.31
$364
$364.31
Min
$.06
$.00 SD
$30.12
$79.50
$65.32

21. Average WTP Across Countries

22. 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
Total mean 79.86
RP=
SP= 46.82
Devoped=94.21
Developing 47.18
US 69.86
US falls in between
We need to look further into why there is such a difference between RP and SP and US and Developed countries

23. Questions???