Valuing the Effects of the Environmental Factors on Health Problems in Britain

This study explores the effects of air pollution on specific diseases. Moreover, this study explores the willingness to pay for improving the air quality in the UK. The estimates are based on data from the British Household Panel Survey (BHPS) and rely on variations in pollution level and health diseases between interviews over time for the same individual. The effects of air pollution on individuals' health diseases are estimated and their monetary value is calculated. In particular, two air pollutants are examined; ground-level ozone (O3) and carbon monoxide (CO). Moreover, two different approaches are followed. The first approach refers to panel discrete choice binary models, Logit and Probit while the second model is the dynamic Probit Random Effects model. Regarding the skin conditions and allergy health problems the annual monetary values for O3 range between £45-£65 per year for a drop of one unit, while the respective values for the CO range between £70-£87. The respective values for O3 and CO range between £173-£208 and £185-£218 respectively for chest and breathing health problems. Regarding the heart health problems the monetary values for O3 and CO respectively range between £178-£216 and £189-£222. Lastly, the MWTP for an inpatient day in hospital for a one unit reduction in pollution are presented under the current regime (free consultation) as well as under the possible fee of £20 per stay proposed by a former Health minister in UK. Considering that the inpatient elective-planned stay cost per day is £2,749, a 4-5 unit decrease in air pollutants will lead to a MWTP equivalent to the inpatient cost