How Much do We Care about Air Quality Improvements? Evidence from Italian Households Data
AbstractThe purpose of this study is to identify the drivers of the Willingness to Pay (WTP) for air quality improvements in Italy. A better understanding of which factors, besides income, influence the willingness to pay for air quality improvements is important to guide future air quality policy. We estimate the WTP for air quality improvements in Italy using a novel approach (Ebert, 2007) and a unique dataset obtained by merging data on Italian households’ monthly current expenditure and information on a bundle of air pollutants’ concentrations. We find a WTP for air quality improvements between 2 and 10 Euros/month per household. We then consider how WTP varies by location of the household, the level of air quality and over time. We find higher WTP values for the Northwest and the Centre of Italy where the big metropolitan areas are located. We also observe that the WTP for air quality improvements declines as the level of air quality improves. Finally, the value of improvements in air quality decreases over time, maybe signaling a change of preferences.
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Bibliographic InfoPaper provided by Department of Economics, University of Siena in its series Department of Economics University of Siena with number 674.
Date of creation: May 2013
Date of revision:
Willingness to Pay; Air Quality Improvements; Demand Systems;
Find related papers by JEL classification:
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-05-11 (All new papers)
- NEP-ENE-2013-05-11 (Energy Economics)
- NEP-ENV-2013-05-11 (Environmental Economics)
- NEP-EUR-2013-05-11 (Microeconomic European Issues)
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