PM2.5 pollution-related health effects and willingness to pay for improved air quality: Evidence from China’s prefecture-level cities

The public health risks attributed to PM2.5 pollution exposure are far greater in China than in many other countries. Few studies have focused on the potential impact of PM2.5 pollution on respondents’ self-rated health, physical health, and mental health. Using an instrumental variable model and constructing instrumental variables of ventilation coefficients, this study analyzes 2011, 2013, and 2015 data from the China Health and Retirement Longitudinal Study (CHARLS), a nationally representative sample of adults over 45 years of age. By matching the health data with the PM2.5 data in 272 prefecture-level cities, this study examines the impact of PM2.5 pollution on public health and measures the marginal cost (MC) of PM2.5 reduction. Empirical results show that PM2.5 can significantly lower self-rated health and increase the probability of chronic diseases and mental depression. Using the marginal rate of transformation between income and PM2.5, the results show residents, on average, are willing to pay 869 Yuan for reduced PM2.5. Moreover, respondents’ gender, age, education level, and locality significantly affect PM2.5 pollution-related health and the MC for clean air. Specifically, MC levels in males are higher than those in females; people aged over 60 show the highest MC levels; the respondents who are less educated are willing to pay more for pollution mitigation; and residents living in Eastern China have a greater MC for PM2.5 pollution control. We further propose several important recommendations for policy-makers based on our results, which offer new evidence to mitigate PM2.5 pollution in China.