Cost of Air Pollution: A Meta-Analysis of Air Quality Valuations

Air quality occupies a central component of environmental health. Improving air quality often involves making trade-offs between competing social goals, like economic development and public health. Many studies have attempted to measure the values of air quality improvements. Often this is done in terms of (health care) costs-avoided or implicit or explicit measures of what individuals are willing to pay to enjoy cleaner air. Appreciating how much society values cleaner air helps inform policy makers as they make decisions about the appropriate means that should be allocated to air quality improvement. Air quality is a public good and, therefore, difficult to value.

This paper provides a statistical summary of air quality valuations conducted around the world. The many air quality valuation studies often reach very different estimates. Value estimates typically vary along with estimation techniques and context (both the people and their environment) studied. This paper seeks to explain systematic variation in value estimates across studies. Our analysis includes an evaluation of stated and revealed preference studies that measure air quality against health costs, property values, and morbidity and mortality. It provides insights into the costs to society of air pollution and how much people are willing-to-pay for air quality improvements. It also allows us to generalize about the nature of air quality valuations and identify its systematic determinants. This paper discusses the implications of these findings on future air pollution and environmental policies.