Researchers at the Yale School of Public Health and Peking University have found that Chinese families are willing to invest up to 6 percent of their annual income in efforts to improve air quality.
Published in Ecological Economics on March 7, the study aimed to determine the amount people are willing to pay for efforts to reduce air pollution, such as environmental policies to introduce more electric cars and natural gas heating. The researchers found that on average, families with children under the age of 6 are willing to invest 5.9 percent of their annual income, while families without children under 6 years old are willing to pay 3.3 percent.
“When we get all these values of willingness to pay for major population groups for China, we can let the policymakers know what is the potential demand and how they can match the demand and supply of good air,” said Xi Chen, a lead author on the study and a professor at the School of Public Health.
Xiaobo Zhang, chair of the Peking University economics department and a co-author on the study, emphasized the growing concern of air pollution in China and his interest in studying its impact, as well as solutions to resolving the crisis. Chen said that in recent years, the Chinese government has been increasing environmental regulations in an effort to combat the phenomenon.
By calculating different types of households’ willingness to pay for higher air quality, the researchers gauged the overall value of air quality for the general population and the demand for greater policies and reforms targeting air pollution. The scientists took data from a survey of about 90,000 people from 25 provinces in China. Led by Peking University, this survey — called the China Family Panel Studies — asked participants for their income level and a rating of how happy they were.
Chen said most studies in this area would ask people directly how much they want to pay to invest in combatting air pollution, but this can lead to exaggerations and imprecise values.
Additionally, because this survey covered people from most of the country, the researchers segmented the participants into geographical groups, each of which was close to an air monitoring station. Individuals within a 25-mile radius of the nearest monitoring station were assigned the pollution level of that monitoring station, Chen said.
The researchers then modeled the relationship between income and air pollution level, keeping the happiness level constant. Because income increases happiness while air pollution decreases happiness, a trade-off exists between the two variables such that an individual would still have the same amount of happiness, according to Chen. They found the equilibrium point where people would trade a certain amount of income to receive better quality air.
“Each individual has a different trade-off, so we can measure the willingness to pay for one ‘standard unit’ of air quality,” Chen said.
The study found that people are willing to pay an average of 539 yuan — the equivalent of $88, or 3.8 percent of annual per capita household income — for a 1 microgram per cubic meter reduction in PM2.5 per year per person. PM2.5 refers to particulate matter with a diameter of less than 2.5 micrometer suspended in the air that can be highly damaging to one’s health at high concentrations. According to the paper, this means that a decline of one standard deviation in PM2.5 would raise an average person’s happiness by an amount worth 49 yuan, or $8, per day.
The study focused on the monetary value of reducing PM2.5, because of the particular danger associated with the particle’s small size. The paper noted that while PM10 is cleared by mucociliary mechanisms in the upper airways, PM2.5 penetrates lungs at the alveolar level, going directly to the circulatory system and releasing toxic substances in the blood.
“Fighting air pollution is high on the government policy agenda in China,” Zhang said when discussing the conclusions’ significance. “When allocating a limited budget across different uses, it is very important to provide evidence to back up the need for more public expenditure on combating air pollution.”
Chen said the researchers plan to study how air pollution can increase societal inequalities in health. He added that home air filters can be costly, while face masks — the less expensive alternative — are much less effective. Although poorer people are able to pay the least to fight air pollution, they will suffer the most due to their lack of resources such as air filters, according to Chen.
According to the World Health Organization, almost half of the Chinese population is exposed to PM2.5 at a level beyond the U.S. hazard threshold.