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Valuation of Air Quality in Chile: The Life Satisfaction Approach

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Abstract

Chile is one of the worst countries in Latin America in terms of urban air pollution. This situation negatively affects the health and well-being of Chileans. This paper uses a non-traditional valuation method, based on life satisfaction perception, to estimate citizens’ willingness to pay (WTP) for the reduction of air pollution in Chilean cities. We consider the annual average of PM10 and PM2.5 for 70 municipalities, including the main urban areas. An objective measure of air pollution is linked to a subjective measure of life satisfaction by using the main survey of households in Chile for cross-sectional socioeconomic data. According to our knowledge, this is the first study of its kind in Latin American and, in the case of PM2.5 reductions, one of the first cases at the world level. We found that our estimation of WTP for reducing PM10 and PM2.5 emissions are significantly lower in Chilean cities than in most of the results found in the literature in other countries. However, when comparing this paper results to the ones from other Chilean studies, perspectives vary, e.g., our estimation of WTP for reducing MP10 is higher than one obtained when using the damage function approach but comparable to another obtained with the hedonic prices approach.

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Notes

  1. For example, this method has not been considered in various relevant and modern books of environmental valuation, such as in Volume 2 of the Handbook of Environmental Economics (Mäler and Vincent 2006), or in Pearce et al. (2006), Vásquez et al. (2007), and Freeman et al. (2014).

  2. Encuesta de Caracterización Socioeconómica (in Spanish). It is the national household survey of socioeconomic characterization in Chile, developed by the Ministry of Social Development (MSD 2018).

  3. More detailed information was not available.

  4. CASEN and INE (2018).

  5. In the case of Ordered Probit regressions, it is not necessary to calculate the marginal effect since the aim of this exercise (the calculation of the MRS) can be obtained by the coefficients of income and air pollution variables.

  6. A similar variable was used in Levinson (2012).

  7. That kind of information is not available for most of the urban areas of Chile. In much of them, there is a lack of data for some days every month.

  8. The study for Canada (Barrington-Leigh and Behzadnejad 2017) considers PM2.5 but was not statistically significant.

  9. Information about air pollution abatement plans for various Chilean cities is available at www.bcn.cl.

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Acknowledgements

We are grateful for helpful comments and valuable suggestions from Richard Wilson, Ricardo González, Jack Polidori, Yanko Vergara, Mark Collins, and two anonymous reviewers.

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Authors and Affiliations

  1. Facultad de Ciencias Jurídicas y Empresariales, Universidad de la Frontera, Temuco, Chile

    Yenniel Mendoza

  2. Facultad de Economía y Planificación, Universidad Nacional Agraria La Monina, Lima, Perú

    Roger Loyola

  3. Instituto de Investigaciones Económicas, Universidad Nacional Autónoma de México, México DF, México

    Alonso Aguilar

  4. Facultad de Economía, Universidad Nacional Autónoma de México, México DF, México

    Roberto Escalante

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  1. Yenniel Mendoza
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  2. Roger Loyola
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Mendoza, Y., Loyola, R., Aguilar, A. et al. Valuation of Air Quality in Chile: The Life Satisfaction Approach. Soc Indic Res 145, 367–387 (2019). https://doi.org/10.1007/s11205-019-02103-1

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