Willingness to Pay for Clean Air: Evidence from the UK
IMF Working Papers, February 17, 2023
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- Willingness to Pay for Clean Air: Evidence from the UK
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Bibliographic details
- Authors: Giorgio Maarraoui, Walid Marrouch, Faten Saliba, Ada Wossink
- Published: February 17, 2023
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400234668.001
Summary
- This paper uses life satisfaction data to help the design of climate mitigation policies in the United Kingdom.
- It assesses the effects of exposure to ambient pollutants on long-term life satisfaction and short-term mental health in the UK.
- The willingness to pay for clean air is found to be significant and increases with level of education.
- The measurements derived can be used as benchmarks for pollution abatement subsidies or pollution taxes and can help in projecting a more comprehensive assessment of costs and benefits.
Methods and Data
- Estimated augmented Cobb-Douglas utility functions.
- Econometric approach: pooled and random effects ordinal logit models.
- Outcome measures: long-term happiness (life satisfaction) and short-term mental health.
- Pollutants analyzed: NO2, PM10, PM2.5.
Key Findings
- Increases in NO2, PM10 and PM2.5 significantly decrease the odds of long-term happiness in the UK.
- Increases in NO2, PM10 and PM2.5 significantly decrease the odds of short-term mental health in the UK.
- Willingness to pay for clean air is significant and increases with level of education.
Policy Implications
- Empirical willingness-to-pay measurements can serve as benchmarks for:
- Pollution abatement subsidies.
- Pollution taxes.
- These measurements can help project a more comprehensive assessment of costs and benefits for climate mitigation policies in the UK.
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- Working Paper