Valuing the Impact of Air Pollution in Urban Residence Using Hedonic Pricing and Geospatial Analysis, Evidence From Quito, Ecuador

Abstract

This study attempts to determine the marginal willingness to pay for cleaner air in the Metropolitan District of Quito (DMQ) Equador by estimating the impact of air pollutants on property values. Spatial interpolation techniques portray pollutant concentrations in the DMQ.  A hedonic model estimates air pollution impacts on properties.  Impacts of three pollutants, (Particulate Matter-PM2.5, Nitrogen Dioxide-NO2, and Sulfur Dioxide-SO2) were estimated. The impact were statistically significant with decreases in property values of between 1.1% and 2.8%, or between $1,846.20 and $4,984.74 US$.

...

The most significant impact was from NO2 with a coefficient of ‒2.765, meaning that an increase in 1% of this pollutant will have a 2.8% decrease in the property price.  NOx is one of the very few air pollutants that people are able to perceive. This result is significant since the average residence value is 865.13 US$/m2, meaning a reduction in house value of 23.92 US$/m2. The other one is O3, which was also statistically significant, but only at 10%. The impact of a 1% increase in concentration of O3 will decrease the residence value 7.41 US$/m2. The other two air pollutants are odorless. PM2.5, had a coefficient of ‒1.733 and was statistically significant at the 95%  level. implying that an increase of 1% in PM2,5 concentrations will reduce a property's value 14.99 US$/m2. CO had a coefficient of ‒1,103 and was significant at 99%, meaning that an increase in CO concentration will reduce home value by 9.54 US$/m2

https://aqicn.org/faq/2015-06-08/wind-and-air-pollution-forecast-in-quito/

https://doi.org/10.1177/11786221211053277
by Sebastian Borja-Urbano, Fabián Rodríguez-Espinosa, Marco Luna-Ludeña

Universidad de las Fuerzas Armadas – ESPE, Sangolquí, Ecuador
Corresponding Author: Fabián Rodríguez-Espinosa, Departamento de Ciencias de la Tierra y Construcción, Universidad de las Fuerzas Armadas ESPE, Av. Gral. Rumiñahui s/n, Sangolquí, Ecuador. Email: ffrodriguez3@espe.edu.ec
Air, Soil and Water Research via Sage Publications
Volume 14; First Published November 22, 2021; Open Access

Looking Back at Fifty Years of the Clean Air Act - After major expansion in 1970, the Clean Air Act led to substantial emissions reductions and health improvements—as well as some unintended consequences.

Abstract

Since 1970, transportation, power generation, and manufacturing have dramatically transformed as air pollutant emissions fell significantly. To evaluate the causal impacts of the Clean Air Act on these changes, we synthesize and review retrospective analyses of air quality regulations. The geographic heterogeneity in regulatory stringency common to many regulations has important implications for emissions, public health, compliance costs, and employment. Cap-and-trade programs have delivered greater emission reductions at lower cost than conventional regulatory mandates, but policy practice has fallen short of the cost-effective ideal. Implementing regulations in imperfectly competitive markets have also influenced the Clean Air Act’s benefits and costs.

NYC Smog 1966 https://en.wikipedia.org/wiki/1966_New_York_City_smog

Key Findings

• Spatially varying regulations can impose substantial costs on local economies.
• Current applications of market-based mechanisms may fall short of cost-saving expectations.
• Varying fuel content regulations across the United States may impose unnecessary costs on consumers in separated markets.
• Regulatory flexibility for fuel content rules doesn’t always yield cost-effective results.
• Unanticipated costs arising from overly optimistic technology projections are an important issue in the design of renewable fuel requirements.

The SO2 program has been subject to extensive research, with a number of papers focusing on the early years (such as Carlson et al. 2000 and Ellerman et al. 2000) and some recent synthesis and review papers which combine ex-ante and ex-post papers (such as Schmalensee and Stavins 2013). The ex-ante analyses all suggest large cost savings based on a comparison of the least cost solution of achieving the cap to the command-and-control uniform performance standard case. Carlson et al. (2000) note that this cost reduction reflected dramatic declines in their estimated marginal abatement cost functions for sulfur dioxide emissions resulting from changes in technology and low-sulfur coal prices over 1985-1995.

The only true ex post study of the program’s benefits and costs is by Chan et al. (2018), which finds much smaller cost savings than predicted ex ante. In part, this is the result of decisions of several power plants—in concert with their state public utility commissions—to install scrubbers rather than comply by purchasing allowances and/or using low sulfur coal, a decision that Chan et al. estimate increased annual compliance costs by nearly $100 million. Focusing on 2002 as a Phase II year before the transition to a period of regulatory uncertainty and using a mixed logit model of the firm’s compliance decision, the authors find that the SO2 program reduced compliance costs by about $200 million (1995$) and increased public health benefits by roughly $170 million. Chan et al. examine a performance standard that delivers the same aggregate emission outcome as the Acid Rain Program in 2002, which had much higher emissions than the cap due to use of banked allowances. Thus, the cost-savings of the two instruments may be smaller than they would have been under the statutory cap for 2002. Chan et al. also find that the prevailing pattern of allowance trading— from western generating units in sparsely populated areas to eastern generating units in more densely populated areas—increases public health damages by about $2 billion relative to a no-trade counterfactual.

...

The Chan et al. paper builds on the insights in Muller and Mendelsohn (2009), which illustrated through an integrated assessment model how the location of an emission source relative to a downwind population could dramatically affect the monetized damages of a ton of sulfur dioxide emitted at that source. In their counterfactual analyses, Muller and Mendelsohn estimated that trading ratios, based on the relative damages associated with a ton of emissions for a pair of locations, could improve social welfare by nearly $1 billion per year compared to the ton-for-ton trading in the SO2 program as implemented. However, such differentiation in cap-and-trade implementation raises questions about administrative feasibility and accuracy in estimating ratios, especially in the presence of a complicated atmospheric chemistry that could induce negative ratios for NOx (Fraas and Lutter 2012). 

...

While overall coal prices fell during the latter half of the 1990’s, Busse and Keohane found that delivered prices rose for plants covered by Phase I of the SO2 cap-and-trade program relative to those still operating under command-and-control regulation, and prices rose more at plants near a low-sulfur coal source. Overall, they estimate that railroads enjoyed an increase in annual producer surplus of more than $40 million, which represented about 15 percent of the economic surplus created by the cap-andtrade program....

The Impact of Trading on the Costs and Benefits of the Acid Rain Program

Summary:

Enacted under the Clean Air Act Amendments of 1990 with the goal of reducing sulfur dioxide emissions from electric utilities, the Acid Rain Program is often cited as evidence that an emissions trading program can reduce the costs of pollution reduction. A team of researchers examines the compliance costs and health effects realized under the Acid Rain Program compared with a command-and-control alternative.

Abstract:

This study quantifies the cost savings from the Acid Rain Program (ARP) compared with a command-and-control alternative and also examines the impact of trading under the ARP on health damages. To quantify cost savings, we compare compliance costs for non-NSPS (New Source Performance Standards) coal-fired electricity generating units (EGUs) under the ARP with compliance costs under a uniform performance standard that achieves the same aggregate emissions. We do this for the year 2002, the third year of Phase II of the program. We find annual cost savings of approximately $240 million (1995$). To examine the health effects of trading, we compute the health damages associated with observed sulfur dioxide (SO2) emissions from all units regulated under the ARP in 2002—approximately 10.2 million tons—and compare them with damages from a No-Trade counterfactual in which each unit emits SO2 at a rate equal to its allocation of permits for the year 2002, plus any drawdown of its allowance bank. Damages under the ARP are $2.4 billion (2000$) higher than under the No-Trade scenario. This reflects the transfer of allowances from EGUs west of the Mississippi River to units in the eastern United States with higher exposed populations.

http://www.photosforclass.com/download/2512035751

http://www.rff.org/research/publications/impact-trading-costs-and-benefits-acid-rain-program

by H. Ron Chan, B. Andrew Chupp, Maureen L. Cropper, Nicholas Z. Muller
Resources For the Future (RFF) www.RFF.org
Discussion Paper DP 15-25-REV | April 12, 2017 | 52 pages |

Social Costs of Morbidity Impacts of Air Pollution

Abstract:

Outdoor air pollution is a major determinant of health worldwide. The greatest public health effects are from increased mortality in adults. However, both PM and O3 also cause a wide range of other, less serious, health outcomes; and there are effects on mortality and morbidity of other pollutants also, e.g. nitrogen dioxide (NO2) and sulphur dioxide (SO2). These adverse health effects have economic consequences; OECD (2014) suggests that the social costs of the health impact of outdoor air pollution in OECD countries, China and India was approximately USD 1.7 trillion and USD 1.9 trillion, respectively, in 2010. However, the study highlights that though the social costs of premature mortality account for the majority of these totals, the social costs of morbidity remain poorly estimated. The objective of this paper is to inform the development of improved estimates of the social costs of human morbidity impacts resulting from outdoor air pollution in two components; namely to develop a core set of pollutant-health end-points to be covered when estimating the costs of morbidity, and to review current estimates of the cost of morbidity from air pollution.

Nitrogen dioxide 2014 - global air quality levels
https://en.wikipedia.org/wiki/Air_pollution
 
UNECE http://tinyurl.com/gs4wceb

http://www.oecd-ilibrary.org/environment/social-costs-of-morbidity-impacts-of-air-pollution_5jm55j7cq0lv-en

The full report is available free of charge

by Alistair Hunt 1, Julia Ferguson 2, Fintan Hurley 3, Alison Sear l and 3
1. University of Bath, United Kingdom
2. University of Cranfield, United Kingdom
3. Institute of Occupational Medicine, United Kingdom
OECD www.oecd.org Environment Working Papers
Number 99; January 28, 2016; 78 pages

Keywords: health impact assessment, air quality regulation, non-market valuation