Willingness to pay for staying away from haze: Evidence from a quasi-natural experiment in Xi'an

Feng Lan, Jingzeng Lv, Jie Chen, Xiaoling Zhang, Zhuohui Zhao, David Y.H. Pui

Research output: Contribution to journalArticlepeer-review

2 Scopus citations

Abstract

Previous studies of the residents' willingness to pay (WTP) for air quality improvement are likely suffering various endogeneity biases. Exploiting the unique opportunity of a recent quasi-experiment operation of the world's first SFT (Smog Free Tower) in China's northwestern city Xi'an, this paper reliably calibrates local residents' WTP for less exposure to haze by analyzing the price responses of housings in the neighborhoods of SFT. The hedonic regression is applied in the DID (difference-in-difference) setting, with further assistances of the PSM (propensity score matching) method, quantile regression and placebo test. The regression results consistently suggest that housing price responded positively to the installment of the SFT, and the impact estimates are closely centered around 4%. The study also indicates high-priced housings response much more to the operation of the SFT than cheap-priced housings, suggesting uneven distribution of welfare gains of air quality improvement. A cost-benefit analysis of the SFT project indicates that the economic benefits of this project far outweigh the costs involved. The paper concludes with discussions of policy implications of this paper for environment governance.

Original languageEnglish (US)
Article number110301
JournalJournal of Environmental Management
Volume262
DOIs
StatePublished - May 15 2020

Bibliographical note

Funding Information:
The authors acknowledge the financial support from NSFC-ESRC Joint Funding ( NSFC71661137004 ) and the National Science Foundation of China ( NSFC71974125 ; NSFC71573166 ; NSFC71874136 ; NSFC71834005 ; NSFC71573201 ).

Keywords

  • Air pollution
  • Air quality
  • Haze
  • Housing price
  • PSM-DID
  • Willingness to pay

PubMed: MeSH publication types

  • Journal Article

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