how much will people pay for clean air? evidence from china - personal air purifier

Pollution is undoubtedly a major problem.
But how much is people willing to pay to get rid of it?
Answer: a lot.
But it also depends on one's income.
This was discovered by me and my co-author in a new study.
As leaders of emerging economies such as China and India step up their efforts to deal with pollution, the results were released.
We provide a key indicator to help them decide which specific policy changes are in the right balance between economic growth and clean air.
In order to understand people's willingness to buy clean air, we have studied the air purifier market in China --
The main way for families to reduce air pollution is to do it by themselves.
By studying the market, we find that people are willing to pay $5 on average.
46 remove 1 microgram of pollution per cubic meter of air they breathe for five years.
But people's will is also very different, from zero to low.
People with high incomes, $15 per microgram per cubic meter in five years. (
View our infographic)
Let's break down how we get these numbers.
First of all, I and co-author Zhang Shuang of the University of Colorado were lucky enough to create a natural experiment for us in China, where the Huaihe River policy provides free coal
Only provide heat to those who live north of the river.
This policy has caused much more pollution in the North than in the South.
30% worse, actually.
In addition to that, another policy prohibits or blocks the flow from one city to another, so living at these heights-
The polluted cities have been forced to be exposed to pollution for decades.
Although these factors are undoubtedly unfortunate, they provide a set for people exposed to pollution (A control group)not exposed.
These people are the same in almost all other ways.
Our assumption is that if people pay attention to clean air, they will buy air purifiers that can effectively reduce indoor air pollution.
Those who are the most polluted will buy more.
To prove this, we collected the monthly sales of air purifiers sold in retail stores in 81 cities in China, the monthly average price paid and detailed product attributes, such as the effectiveness of reducing pollution --
Both North and South-
From January 2006 to December 2012.
We also collected pollution data from the monitoring and population information of the Chinese census.
According to these data, our hypothesis is proved to be correct.
We see a significant increase in the number of air purifiers purchased in northern cities compared to the south, with a 20% increase in market share.
From there, we can calculate the cost per unit that people are willing to pay (the $5. 46 figure).
So how do we use this number to judge a particular policy?
So there is a case study here.
In 2005, the Chinese government and the World Bank carried out reform pilot projects to improve the Huaihe River policy.
By that time, the policy had become neither flexible nor inefficient.
Although in 2003, as the country transitioned to a market economy, the burden of paying for heat was largely shifted from government to consumers, consumers still have little control over their heat or how they measure their consumption.
Most of the heat is generated and controlled by large boilers in the apartment building, and the home pays a fixed fee.
To correct these problems, the government and the World Bank have introduced household measurement and consumption
Consumers can control their own heat and pay for the heat they consume based on billing.
They did it in seven northern cities. Using back-of-the-
In the envelope calculation, we find that the willingness to pay for these reforms is $1.
£ 88 million per city per year.
This figure shows the overall benefits of family reform.
Reform costs $13,000 per city every year.
Since the benefits outweigh the costs, these reforms are good ones that should be expanded.
Knowing "willingness to pay" is a definitive way to show how citizens weigh money in their pockets and the air they breathe.
But this is also a solid figure that lawmakers can use to distribute value to their policies and guide their decisions.
For lawmakers in places like China and India, they are now considering a complete set of policies to eliminate air pollution, a policy tool that will not appear in better times.
Check our infographic about this study here.