A Generalized Method of Hedonic Prices: Measuring Benefits from Reduced Urban Air Pollution

Abstract

"Individuals are exposed to air pollution while staying at home, traveling in the city and working at a place. The hedonic property price model is used to estimate benefits individuals get from the reduced pollution at home and the hedonic wages model is used to the estimate benefits from reduced pollution at the work place. The paper suggests that the hedonic travel cost method could be used to estimate benefits to individuals from the reduced exposure to pollution in travel within the city. The individual’s marginal willingness to pay for reduced pollution in the city is a sum of the marginal willingness to pay for reduced exposure at home, in travel and at the work place. Hedonic property prices and the hedonic travel cost models are estimated using data collected through a survey of households in the twin cities of Hyderabad and Secunderabad in the state of Andhra Pradesh in India."