Air pollution and its economic impacts at household level: willingness to pay for environmental services in Pakistan.

Air pollution has become a major global problem. Thus, the goal of this study was to find out the economic impacts (treatment cost) of air pollution on households as well as the principal factors inducing an individual's willingness to pay for better air quality. District Faisalabad was purposively selected for sampling, as it is a major industrial hub in Pakistan. The required information was collected from 120 sampled respondents through a structured questionnaire. The ordinary least squares method was used for assessing the impact of various factors on the treatment cost of the most recent episode of ailment related to air pollution. The ordered logit model was used to assess the impacts of factors affecting the willingness to pay for programs aimed at the provision of better environmental services. The results revealed that high air pollution in the urban area resulted in more lost workdays and higher health costs. The findings also showed that people were willing to pay for better air quality in urban areas than in rural areas. Based on the findings, it is suggested that the incentive schemes may be designed for the promotion of cleaner services in rural and urban areas.