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Willingness to pay for clean air: Evidence from quasi-experiment in Japan

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Abstract

Over the past decades ambient concentrations of suspended particulate matter (SPM) have dramatically reduced in metropolitan areas in Japan. This paper analyzes a property-level panel dataset for 1992-2015 to measure the extent to which the improved air quality was capitalized into residential land prices. Single-equation estimates show no evidence of the capitalization. To address potential endogeneity biases, I instrument SPM concentrations with municipalities’ designation status under the Automobile NOx/PM Law (ANPL), and find that the elasticity of residential land prices with respect to SPM concentration is -0.57. Using IV approach, I also find that the improvements in SPM concentrations increased inflows of migrations. These results are confirmed with a battery of robustness checks.

Suggested Citation

  • Na, 2019. "Willingness to pay for clean air: Evidence from quasi-experiment in Japan," 2019 Conference (63rd), February 12-15, 2019, Melbourne, Australia 285086, Australian Agricultural and Resource Economics Society (AARES).
  • Handle: RePEc:ags:aare19:285086
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    File URL: http://ageconsearch.umn.edu/record/285086/files/216%20-%20Willingness%20to%20pay%20for%20clean%20air.pdf
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    Environmental Economics and Policy;

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