Panel Paper: Willingness to Pay for Environmental Quality Improvements: Evidence from China

Friday, July 20, 2018
Building 3, Room 211 (ITAM)

*Names in bold indicate Presenter

Alice Tianbo Zhang, Dong Guo and Anyi Wang, Columbia University

In many regions of the developing world, rapid industrialization and urbanization are accompanied by deteriorating environmental quality. While poor environmental quality imposes substantial health and productivity costs on the local population, existing studies have generally found low marginal willingness to pay (WTP) for mitigating environmental damages. To understand the determinants and the size of WTP for environmental quality improvements, we conducted a large-scale in-person survey in three Chinese cities in May 2016 and collected comprehensive demographic, education, income and stated preference information from more than 3,000 correspondents. Combining the survey data with ground-level monitor data on air pollution, we use a contingent valuation method (CVM) to find that exposure to air pollution is a significant determinant of the extent individuals are willing to pay for overall environmental improvements as well as improvement in air quality. Consistent with previous CVM studies in China, male, younger and more educated individuals tend to have higher WTP. We also find suggestive evidence that sustainability awareness affects whether individuals are willing to pay for improved environmental outcomes.