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The Health and Visibility Cost of Air Pollution: A Comparison of Estimation Methods

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  • Delucchi, Mark
  • Murphy, James
  • McCubbin, Donald

Abstract

Air pollution from motor vehicles, electricity-generating plants, industry, and other sources can harm human health, injure crops and forests, damage building materials, and impair visibility. Economists sometimes analyze the social cost of these impacts, in order to illuminate tradeoffs, compare alternatives, and promote efficient use of scarce resource. In this paper, we compare estimates of the health and visibility costs of air pollution derived from a meta-hedonic price analysis, with an estimate of health costs derived from a damage-function analysis and an estimate of the visibility cost derived from contingent valuation. We find that the meta-hedonic price analysis produces an estimate of the health cost that lies at the low end of the range of damage-function estimates. This is consistent with hypotheses that on the one hand, hedonic price analysis does not capture all of the health costs of air pollution (because individuals may not be fully informed about all of the health effects), and that on the other hand, the value of mortality used in the high-end damage function estimates is too high. The analysis of the visibility cost of air pollution derived from a meta-hedonic price analysis produces an estimate that is essentially identical to an independent estimate based on contingent valuation. This close agreement lends some credence to the estimates. We then apply the meta hedonic-price model to estimate the visibility cost per kilogram of motor vehicle emissions.

Suggested Citation

  • Delucchi, Mark & Murphy, James & McCubbin, Donald, 2002. "The Health and Visibility Cost of Air Pollution: A Comparison of Estimation Methods," Institute of Transportation Studies, Working Paper Series qt03s2x9xb, Institute of Transportation Studies, UC Davis.
    • Handle: RePEc:cdl:itsdav:qt03s2x9xb
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    6. Eva Kougea & Phoebe Koundouri, 2011. "Air Quality Degradation: Can Economics Help in Measuring its Welfare Effects? A Review of Economic Valuation Studies," Chapters, in: Jose A. Orosa (ed.), Indoor and Outdoor Air Pollution, IntechOpen.
    7. Athukorala, Wasantha, 2013. "Health Benefits and Industrial Air Pollution: A Comparison between People’s Willingness to Accept and the Opportunity Cost of Health Risk," Sri Lankan Journal of Agricultural Economics, Sri Lanka Agricultural Economics Association (SAEA), vol. 14, pages 1-17.
    8. Delucchi, Mark A. & McCubbin, Donald R., 2010. "External Costs of Transport in the U.S," Institute of Transportation Studies, Working Paper Series qt13n8v8gq, Institute of Transportation Studies, UC Davis.
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    10. Fu, Shihe & Gu, Yizhen, 2017. "Highway toll and air pollution: Evidence from Chinese cities," Journal of Environmental Economics and Management, Elsevier, vol. 83(C), pages 32-49.
    11. Mandana Mazaheri & Yvonne Scorgie & Richard A. Broome & Geoffrey G. Morgan & Bin Jalaludin & Matthew L. Riley, 2021. "Monetising Air Pollution Benefits of Clean Energy Requires Locally Specific Information," Energies, MDPI, vol. 14(22), pages 1-14, November.
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