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Willingness to Pay for Clean Air: Evidence from the UK

Author

Listed:
  • Giorgio Maarraoui
  • Walid Marrouch
  • Faten Saliba
  • Ada Wossink

Abstract

This paper uses life satisfaction data to help the design of climate mitigation policies in the United Kingdom. We assess the effects of the exposure to ambient pollutants on long-term life satisfaction and short-term mental health in the UK. We estimate augmented Cobb-Douglas utility functions using pooled and random effects ordinal logit models. Results show that increases in NO2, PM10 and PM2.5 significantly decrease the odds of longterm happiness and short-term mental health in the UK. The willingness to pay for clean air is also significant and increases with level of education. These measurements derived can be used as benchmarks for pollution abatement subsidies or pollution taxes and can help in projecting a more comprehensive assessment of costs and benefits.

Suggested Citation

  • Giorgio Maarraoui & Walid Marrouch & Faten Saliba & Ada Wossink, 2023. "Willingness to Pay for Clean Air: Evidence from the UK," IMF Working Papers 2023/035, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2023/035
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    Keywords

    Air Pollution; Happiness; Policy Valuation; Climate Change; Environmental Policies; Pollution Taxes; Pollution Abatement Subsidies; life satisfaction data; dataset description; air pollutant; pollutants' correlation; household data; ordinal Logit; Income; Europe; Global;
    All these keywords.

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