Assessment of willingness to pay for improved air quality using contingent valuation method

Rapid urbanization and severe air quality deterioration in Pakistan have increased citizens’sconcern towards air pollution. The study aimed to develop relationship between degraded air qualityand resident’s willingness to pay for improved air quality in city of Lahore, Pakistan through contingentvaluation method to quantify an individual’s willingness to pay for improved air quality. Hypotheticalmarket was created and 250 respondents, selected through random sampling, were asked to respond to pretested questionnaire. Results revealed that 92.5% of respondents showed positive willingness to pay andaverage predicted willingness to pay by each person was $9.86 per month. Respondents were willing to pay$118 per year which was 1.27% of their mean monthly income. Stepwise Regression model was used todevelop relationship between independent variables and willingness to pay. Most parameters accompaniedby econometric analysis elaborated expected results. Results disclosed that annual household income,symptoms of respiratory diseases and self observed air pollution pointedly impact willingness to pay. It isconcluded that despite of the fact that Pakistan is among the lower income countries with no rigid budgetallocation for improvement in air quality, people of Pakistan are willing to pay to reduce air pollution load.One of the factor which effected the positivity of willingness to pay is that, a quite large number of peoplewere suffering from pollution related respiratory disorders like asthma, chronic bronchitis, wheezing, cough,and chest congestion. Only 7.5% of respondents were not interested to pay for improved air quality whichreported unconcerned attitude and lack of environmental awareness.

Keywords:

Air pollution , Contingent valuation method (CVM) , Developing country , Regression model , Respiratory diseases , Willingness to pay (WTP)