Residents' Willingness to Pay for Improving Air Quality in Jinan, China

Along with the progress of urbanization and environmental deterioration, residents' desire for improved air quality is increasing. In order to quantify an individual's willingness-to-pay (WTP) for improved air quality in Jinan of eastern China, a contingent valuation method (CVM) was employed. A sample of 1,500 residents was chosen on the basis of multistage sampling methods with face-to-face interviews by using a series of hypothetical, open-ended scenario questions which were designed to elicit the respondents' WTP. Results showed that 59.7% of respondents were able to express their WTP and the mean WTP is 100 Chinese Yuan (CNY) per person per year. A probit model on the probability of a positive WTP and a regression model were developed to find the relationship between endogenous variables and WTP. Most parameters in the econometric analysis had the expected sign. Annual household income and expenditure on treating respiratory diseases significantly influence WTP. The rates of positive WTP and the monetary amount are larger for men than for women. Results also showed that people who lived in more polluted areas were willing to pay more for clean air. Unlike developed countries, clean air may only be considered as a public good in China in that more than 40% of respondents had no incentive to bear the costs of attempting to achieve better air quality, which indicates the relatively low environmental consciousness.