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How much are urban residents in Mexico willing to pay for cleaner air?

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  • Gonzalez, Fidel
  • Leipnik, Mark
  • Mazumder, Diya

Abstract

We estimate the marginal willingness-to-pay for PM10 abatement in the three largest Mexican cities. We use a unique data set with actual market transactions at the household level from January 2003 to May 2004 and observed PM10 concentrations. We follow an instrumental variable approach to mitigate bias from omitted variables. We exploit the seasonality in PM10 concentrations due to rainfall patterns in those cities to construct a valid instrument for PM10. We find the house price–pollution elasticity to be around − 0.07 for Mexico City, − 0.05 for Guadalajara, and − 0.07 for Monterrey, implying that one unit reduction in PM10 levels is valued at US$41.73, 36.34 and 43.47, respectively. Our results indicate that urban residents of Mexico are willing to pay for cleaner air.

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  • Gonzalez, Fidel & Leipnik, Mark & Mazumder, Diya, 2013. "How much are urban residents in Mexico willing to pay for cleaner air?," Environment and Development Economics, Cambridge University Press, vol. 18(3), pages 354-379, June.
    • Handle: RePEc:cup:endeec:v:18:y:2013:i:03:p:354-379_00
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    2. Chakraborti, Lopamudra & Heres, David & Hernandez, Danae, 2019. "Are land values related to ambient air pollution levels? Hedonic evidence from Mexico City," Environment and Development Economics, Cambridge University Press, vol. 24(3), pages 252-270, June.
    3. Wu, Xianhua & Deng, Huai & Huang, Yuxiang & Guo, Ji, 2022. "Air pollution, migration costs, and urban residents’ welfare: A spatial general equilibrium analysis from China," Structural Change and Economic Dynamics, Elsevier, vol. 63(C), pages 396-409.
    4. Massimo Filippini & Adán L. Martínez-Cruz, 2016. "Impact of environmental and social attitudes, and family concerns on willingness to pay for improved air quality: a contingent valuation application in Mexico City," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 25(1), pages 1-18, December.
    5. Minmeng Tang & Deb Niemeier, 2021. "How Does Air Pollution Influence Housing Prices in the Bay Area?," IJERPH, MDPI, vol. 18(22), pages 1-13, November.
    6. Jie-Sheng Tan Soo, 2018. "Valuing Air Quality in Indonesia Using Households’ Locational Choices," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(3), pages 755-776, November.
    7. Matías Fontenla & M. Ben Goodwin & Fidel Gonzalez, 2019. "Pollution and the choice of where to work and live within Mexico City," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-17, December.

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