Estimating economic benefits associated with air quality improvements in Hanoi City: An application of a choice experiment

Abstract

A choice experiment (CE) with approximately 1000 respondents was designed and conducted to estimate economic benefits associated with air quality improvements in Hanoi City, the capital of Vietnam. In this CE application, different scenarios of air quality improvements were described based on reduction in morbidity and mortality risk, and increase in urban tree cover to elicit respondents’ willingness-to-pay (WTP). To gain better understanding of the WTP estimates, the econometric analysis applied several models, including conditional logit models, a mixed logit model, a generalized multinomial logit model and a latent class model. The WTP for maximal improvements is about 0.16–1.88% of household income. Results of marginal WTP for reduction in morbidity and mortality risk suggest that the values of statistical illness relating to air pollution range from USD1,120 to USD8,280, and the values of statistical life fall between USD7,100 and 64,700. Based on marginal WTP for boosting urban tree cover, aggregate WTP estimated for Hanoi population is about USD18.6–124 million per year to achieve the tree cover level of 18m2 per capita. Given the budget limitation, the information on residents’ WTP for improving air quality would be useful for policy makers to invest efficiently in controlling air pollution.