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How Much do We Care about Air Quality Improvements? Evidence from Italian Households Data

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  • Chiara Martini
  • Silvia Tiezzi

Abstract

The 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.

Suggested Citation

  • Chiara Martini & Silvia Tiezzi, 2013. "How Much do We Care about Air Quality Improvements? Evidence from Italian Households Data," Department of Economics University of Siena 674, Department of Economics, University of Siena.
    • Handle: RePEc:usi:wpaper:674
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    References listed on IDEAS

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    More about this item

    Keywords

    Willingness to Pay; Air Quality Improvements; Demand Systems;
    All these keywords.

    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

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