Morbidity Costs of Vehicular Air Pollution: Examining Dhaka City in Bangladesh

Tanzir Chowdhury and Mohammad Imran

No 47, Working papers from The South Asian Network for Development and Environmental Economics

Abstract: This study estimates the morbidity costs of a reduction in air pollution in Dhaka, the capital of Bangladesh, using the Cost-of-Illness (COI) approach. COI is defined as the sum of lost earnings due to workdays lost or restricted activity days and the mitigation expenditure borne due to illness. The data for the research comes from seasonal household surveys using health diaries. We use a random-effects Zero Inflated Poisson regression model to estimate the equation for lost earnings and use a random-effects Tobit Regression to estimate the equation for mitigation expenditure. We find that the annual savings from reducing air pollution to meet national safety standards is Taka 131.37 (USD 1.88) per person from reductions in lost earnings and Taka 150.49 (USD 2.15) per person from reductions in medical expenditure. The annual saving to the population of Dhaka is Taka 2.39 billion or USD 34.09 million. Our estimates, which are based on primary data, provide significantly lower estimates of the benefits of reducing air pollution in Dhaka relative to previous analyses that has relied on the benefit-transfer approach.Keywords: Air pollution, Health Benefit, Health Production Function, Cost-of-illness, Panel Data, Random-Effects Zero Inflated Poisson Model, Random-Effects Tobit Model

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