How Much are Urban Residents in Mexico Willing to Pay for Cleaner Air?

Environment and Development Economics, 18(03), 2013, 354-379

Posted: 2 Jul 2014

See all articles by Fidel Gonzalez

Fidel Gonzalez

Sam Houston State University - College of Business Administration - Department of Economics and International Business

Diya Mazumder

Independent

Mark Leipnik

Sam Houston State University

Date Written: June 2013

Abstract

We estimate the marginal willingness-to-pay for PM10 abatement in the three largest Mexican cities. We use a unique data set with actual market transactions at the household level from January 2003 to May 2004 and observed PM10 concentrations. We follow an instrumental variable approach to mitigate bias from omitted variables. We exploit the seasonality in PM10 concentrations due to rainfall patterns in those cities to construct a valid instrument for PM10. We find the house price-pollution elasticity to be around -0.07 for Mexico City, -0.05 for Guadalajara, and -0.07 for Monterrey, implying that one unit reduction in PM10 levels is valued at US $41.73, 36.34 and 43.47, respectively. Our results indicate that urban residents of Mexico are willing to pay for cleaner air.

Keywords: Mexico, Air Pollution, Willingness to Pay, Hedonic, Housing

JEL Classification: Q51, Q53, O13

Suggested Citation

Gonzalez, Fidel and Mazumder, Diya and Leipnik, Mark, How Much are Urban Residents in Mexico Willing to Pay for Cleaner Air? (June 2013). Environment and Development Economics, 18(03), 2013, 354-379. Available at SSRN: https://ssrn.com/abstract=2216483

Fidel Gonzalez (Contact Author)

Sam Houston State University - College of Business Administration - Department of Economics and International Business ( email )

Huntsville, TX 77341-2118
United States

Diya Mazumder

Independent ( email )

No Address Available

Mark Leipnik

Sam Houston State University ( email )

1803 Ave I
Huntsville, TX 77341
United States

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