Impact of Transboundary Haze Pollution on Household Utilities Consumption

59 Pages Posted: 28 Mar 2017 Last revised: 19 Nov 2019

See all articles by Sumit Agarwal

Sumit Agarwal

National University of Singapore

Tien Foo Sing

National University of Singapore (NUS) - Department of Real Estate

Zoe Yang

The Chinese University of Hong Kong - CUHK Business School

Date Written: November 3, 2019

Abstract

This paper examines the causal effects of air pollution on the household consumption of water and electricity in Singapore. Using the transboundary haze pollution caused by forest fires in Indonesia as an exogenous shock, we find that increases in haze pollutant intensity in the air significantly increase water and electricity consumption. In particular, the intra-day and inter-day analyses on hourly household water consumption are consistent with the risk avoidance and the risk mitigation behaviors during severe haze episodes. During the haze periods, households stay indoors and avoid outdoor activities to minimize exposure to health risks. When they need to engage in outdoor activities during the weekdays, they increase efforts in mitigating health risks associated with air pollution. Moreover, the analysis of social media data shows that the level of public awareness of air pollution is positively related to energy consumption by households. In addition, the effects of haze-induced utilities consumption are correlated with the duration of air pollution. While household utilities consumption quickly returns to normal after transitory pollution exposure, the effects are stronger and persistent after a longer period of air pollution; households maintain a higher level of utilities consumption for two months after a lengthy haze, suggesting substantial spending on additional water and electricity usage due to air pollution events.

Keywords: Transboundary air pollution, haze, environmental externalities, risk avoidance economic activities, household utilities

JEL Classification: D12, F62, Q53, Q54

Suggested Citation

Agarwal, Sumit and Sing, Tien Foo and Yang, Yang, Impact of Transboundary Haze Pollution on Household Utilities Consumption (November 3, 2019). Georgetown McDonough School of Business Research Paper No. 2942096, Available at SSRN: https://ssrn.com/abstract=2942096 or http://dx.doi.org/10.2139/ssrn.2942096

Sumit Agarwal

National University of Singapore ( email )

15 Kent Ridge Drive
Singapore, 117592
Singapore
8118 9025 (Phone)

HOME PAGE: http://www.ushakrisna.com

Tien Foo Sing (Contact Author)

National University of Singapore (NUS) - Department of Real Estate ( email )

4 Architecture Drive
Singapore 117566
Singapore

Yang Yang

The Chinese University of Hong Kong - CUHK Business School ( email )

7/F, Cheng Yu Tung Building
12 Chak Cheung Street, Hong Kong
Hong Kong
Hong Kong

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