Valuation Study

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Value of Air Pollution from Transport Sector


Medium: Air

Country: Indonesia

Analytical Framework(s): Other

Unit(s): WTP (Choice Modelling)

Study Date: 2009

Publication Date: 2010

Major Result(s)

Resource/Environmental Good IDR, per household per year
IDR, per household per year
USD, per household per year
WTP for improvement in public transport policies3 584,333.00 750,026.47 60.99
WTP for improvement in traffic management4 558,000.00 716,226.48 58.24
WTP for reduction in number of old vehicles 579,333.00 743,608.67 60.47

About the Inflation Adjustment: Prices in Indonesia (IDR) changed by 28.36% from 2009 to 2014 (aggregated from annual CPI data), so the study values were multiplied by 1.28 to express them in 2014 prices. The study values could be expressed in any desired year (for example, to 2022) by following the same inflation calculation and being sensitive to directional (forward/backward) aggregations using your own CPI/inflation data.

Study Note: Studies have been conducted to reveal the possible link between air quality and human health. The objective is to estimate how air pollution may be related to increased incidence of mortality and morbidity from various diseases and to calculate the economic benefits from reducing the number of incidences. The steps are: establishing the link between ambient conditions and their effect on humans; determining the population at risk, and, finally, valuing the economic benefits from the improvement of air quality.

Study Details

Reference: Mia Amalia. 2004. Designing a Choice Modelling Survey to Value the Health and Environmental Impacts of Air Pollution from the Transport Sector in the Jakarta Metropolitan Areaa. EEPSEA Research Report, No. 2010-RR3.

Summary: Jakarta Metropolitan Area's (JMA) air is heavily polluted, leading to very poor ambient air quality. Air pollution is generated by every sector that uses energy, including the transport sector. This sector emits a number of primary pollutants and some of them form secondary pollutants. Air pollution and its negative impacts have been recognised and addressed by the development of air pollution control policies for every sector in Indonesia. Three policies were introduced in the transport sector: a) improvement in public transport facilities; b) improvement in traffic management; and c) reduction in number of old vehicles. The primary objective of this research is to estimate the benefits of having cleaner ambient air for JMA citizens as a result of these three policies. Fieldwork conducted in 2008 involved a choice modelling survey to estimate how JMA citizens value lowering the health risks associated with poor air quality. The choice modelling method separated the property of air pollution impacts into the following attributes: number of sick leave days, visibility and odour. The paper documents in greater detail the processes involved in the design and implementation of this method to serve as reference material for researchers who intend to use this tool. The survey results were analysed using Conditional Logit and Random Parameter Logit Models. The results showed that, on average, respondents were willing to pay from USD 63.51 to USD 66.51 per household per annum over a three-year period for the implementation of the three new transportation policies.

Site Characteristics: This research is concerned with relative values caused by changes in the JMA's ambient air quality as the result of the implementation of different transport sector policies. It links policy scenarios with changes in the number of sick leave days caused by respiratory illnesses and environmental conditions. The status quo alternative was the current condition without any change in transport sector policy to improve the JMA's air quality. This research treats clean air as a public good, therefore the approach was a public valuation approach.

Comments: This research deals with the valuation of health and environment. The valuation process encompasses the assignment of money values to changes in environmental services, including non-marketed goods such as clean ambient air. A valuation study on how air pollutants affect people's health needs to include an analysis of where and when people become exposed to those pollutants and which policy causes the change. Previous studies offer methods to value the reduction of health incidence.