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Current Air Pollution and Willingness to Pay for Better Air Quality: Revisiting the Temporal Reliability of the Contingent Valuation Method

Author

Listed:
  • Jie He

    (Université de Sherbrooke)

  • Bing Zhang

    (University of Jinan
    Nanjing University)

Abstract

In this study we examine whether and why preferences for environmental quality improvements depend on current quality. We conducted contingent valuation surveys over the course of a year in Nanjing, China, and find that the willingness to pay for future air quality improvements increases by 0.693% for every 1% increase in the current PM2.5 level. Therefore, the issue of "when" a valuation study is conducted has important implications for the estimation of benefits, and further deserves consideration when applying benefit transfer methods. One possible explanation for this result is projection bias, which arises when people exaggerate the extent to which future preferences will align with current tastes.

Suggested Citation

  • Jie He & Bing Zhang, 2021. "Current Air Pollution and Willingness to Pay for Better Air Quality: Revisiting the Temporal Reliability of the Contingent Valuation Method," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 79(1), pages 135-168, May.
    • Handle: RePEc:kap:enreec:v:79:y:2021:i:1:d:10.1007_s10640-021-00556-y
    DOI: 10.1007/s10640-021-00556-y
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    4. Chen, Xiao & Guo, Gangxing, 2024. "Air pollution and online lender behavior: Evidence from Chinese peer-to-peer lending," Journal of Behavioral and Experimental Finance, Elsevier, vol. 42(C).

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    More about this item

    Keywords

    Temporal reliability; Contingent valuation; Decision-making; Current air quality; Rational and psychological mechanisms;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making

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