Public preferences for air quality improvement: does WTP increase with exposure?

Information about the public valuation of clean air provides helpful guidelines for designing effective policies targeting air pollution, particularly in urban areas with high pollution levels. However, such information is often unavailable to policymakers in developing countries, including Nepal. This study fills this gap by offering the first empirical evidence of stated preference for ambient air quality improvement in Nepal using survey data of 610 households from Siddharthnagar municipality, a rapidly urbanizing city in Nepal. We use the double-bounded dichotomous choice (DBDC) contingent valuation method to estimate willingness to pay (WTP) for air quality improvement to the level that decreases air pollution-related morbidity chances by 50%. Further, we employ spatial econometric models to understand the spatial distribution of WTP. We find significant spatial WTP hotspots near brick kilns and high traffic movement, suggesting strong household demand for clean air around prominent local pollution sources. We also find higher WTP among households more aware of the health and economic costs. On the contrary, outdoor workers are willing to pay less, despite being more exposed to air pollution. Using our preferred DBDC model, we estimate an annual mean WTP value of NRs. 775 (USD 6.6), which equals 0.43% of the household income.