How Much Will People Pay For Clean Air? Evidence From China
For the first time ever last month, the International Energy Agency (IEA) released a major study on the role of energy in air pollution. It showed that air pollution leads to about 6.5 million deaths each year, making it the world’s fourth-largest threat to human health. Most of those deaths are occurring in emerging economies like China and India where air pollution is the worst. And, IEA cautions that, unless changes are made to the way the world uses and produces energy, the deaths from air pollution will only increase with time.
While the numbers are staggering, none of this is entirely surprising given that study after study has shown the immensity of the air pollution problem. The challenge is balancing continued economic growth with regulations to reduce air pollution. Nowhere is that challenge greater than in emerging economies that experience the worst pollution, but also want to use more cheap energy to further grow their economies.
Despite this challenge, lawmakers in places like China are ramping up efforts to reduce pollution. The trick for them is figuring out not just how strongly their citizens prioritize economic growth, but also which specific policy changes strike the right balance. For that, there is a strong barometer: knowing people’s “willingness to pay” for clean air. That figure—rooted in deep economics—is exactly what my coauthor, Shuang Zhang from the University of Colorado, and I sought to discover in a new study. In the study, we lay out one of the first estimates for how much people are willing to pay for clean air in emerging economies. The answer? A lot. But, it also depends on a person’s income. (Check out our infographic)
To figure out people’s willingness to pay, we studied China’s market for air purifiers—the main way households can take reducing air pollution into their own hands. From studying that market, we found that on average people are willing to pay $5.46 to remove one microgram per cubic meter of pollution from the air they breathe for five years . But, people’s willingness also varied widely from zero, for a low-income person, to as much as $15 per microgram per cubic meter over five years for someone with a higher income.