The economic value of air-pollution-related health risks in China

This dissertation studies the economic valuation of air-pollution-related health risks in China, by applying two different valuation methods: the compensating wage differential method and the contingent valuation method. By using the compensating wage differential (CWD) method, the tradeoff between workers' wage and the on-the-job fatality risk workers bear in the labor market is estimated, with consideration of the market opportunities faced by workers in different regions. The result shows that a positive compensating wage differential for on-the-job fatality risk exists in China; and this wage differential convexly decreases with the local unemployment rate. The value of a statistical life (VSL) computed from the estimate varies from 12,000 to 120,000 US dollars, with different estimates of the fatality risk and regressions with and without the local unemployment rates considered.; By using the contingent valuation (CV) method, an individual interview survey is conducted to elicit resident's willingness-to-pay (WTP) for the health risk reductions of asthma and mortality. Binary choice WTP question is used in the in-person interview. The questionnaire is designed to test the hypothesis that the private provision and the public/government provision mechanisms of the health risk reductions have no significantly different effect to people's WTP. Higher WTP for the public/government provision is implied by the theories of altruism and warm glow.; Probit model is used to regress respondent's yes-no answers with the independent variables. The results show that, for the asthma risk reduction, the public/government provision mechanism has no significant effect to WTP, comparing to the private provision mechanism; for the mortality risk reduction, the public/government provision has a significantly negative effect to WTP. The possible reason for this negative effect is that respondents expected that the government was not very likely to provide the public health service to reduce the risk of mortality. Within-group analysis shows that the perceived effectiveness and trust are the major reasons of the stated preference of respondents on the provision mechanisms. This result rejects the hypothesis that the public/government provision would yield higher WTP because of altruistic or warm glow incentives.; In the CV study, the scope/scale effects of WTP to the magnitude of risk reduction and to the description of the severity of disease symptoms are also tested. For the asthma risk case, results suggest that the scope/scale effects are increasing with the income of respondents, which could be explained as that the respondents with higher income have better capability to understand the questionnaire in general as well as the small risk probability. For the mortality risk case, no significant scope/scale effect of WTP to the magnitude of risk reduction is found. A possible reason is that the magnitude of the mortality risk is even smaller, thus it is even more difficult for respondents to understand the probability of the mortality risk. Another possible reason is that respondents may have different perceived risk than the stated risk in the questionnaire.; The estimated median value of a statistical case of asthma from the CV study is about 2400 US dollars, while the estimated median VSL is about 24,000 US dollars. Possible reasons of the discrepancy between the results generated by the CWD and the CV methods are discussed. Comparing these results to other studies, I suggest the interval of 20,000 to 60,000 US dollars as the VSL for researchers and policy makers. (Abstract shortened by UMI.)...