Economics at your fingertips  

Valuing Air Quality in Indonesia Using Households’ Locational Choices

Jie-Sheng Tan Soo ()
Additional contact information
Jie-Sheng Tan Soo: National University of Singapore

Environmental & Resource Economics, 2018, vol. 71, issue 3, 755-776

Abstract: Abstract Air quality is already at unprecedented levels in many developing countries and is projected to worsen up until 2050. At the same time, despite the known adverse impacts of air pollution, questions remain of willingness-to-pay for cleaner air as existing studies are scarce and have several endogeneity concerns. To address this knowledge gap, I apply a locational equilibrium model to data from Indonesia. This model exploits migration patterns induced by spatial variation in air quality, wages, and cost-of-living to value air quality. I control for (a) migration distance and religious preferences, and (b) endogeneity of air pollution using a wind- and distance-based fire hotspots instrument. My estimates of MWTP of $$\hbox {PM}_{2.5}$$ PM 2.5 are higher than results from hedonic property models. I also consider heterogeneous MWTP and show that households with children and higher education level have larger valuation for clean air. In sum, this paper demonstrates a potentially novel and rigorous tool to value air quality improvements in developing countries and is an important first step to help policymakers evaluate policies to contain this growing problem.

Keywords: Indonesia; Horizontal sorting; Air quality; Migration; Tropical forest fires (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2019-05-15
Handle: RePEc:kap:enreec:v:71:y:2018:i:3:d:10.1007_s10640-017-0182-z