Pollution, Productivity and Willingness to Pay for Clean Air

Air quality has become a pressing concern in many developing countries, particularly in South Asia. The 2019 State of Global Air study found that in South Asia, air quality levels represented a loss of two to three years in average life expectancy. In Bangladesh, it was estimated that 200,000 people died in 2017 due to poor air quality. While the human capital costs of air pollution have been documented extensively, there remain major gaps in our understanding of the effects of air pollution and, more importantly, the ability and willingness of individuals and firms to avoid these damages. This project will conduct a field experiment with randomised allocation of air purifiers in small-scale textile firms in Bangladesh to estimate the effect of air pollution on worker productivity as well as willingness to pay for defensive investments that help reduce exposure to air pollution.

In the first part of this project, 40 firms will be randomly sampled from a listing survey of 750 garment factories in Dhaka and have air quality monitors installed in their factory. In 20 randomly selected firms, air purifiers will be installed for a period of six months. By comparing productivity means - measured in pieces produced/worker-day - between the treatment and control group, it is possible to estimate the impact of air filters on productivity. In the second part, 600 firms will be randomly sampled out of the remaining 710 garment factories. For treatment firms, surveyors will walk factory owners and factory workers through pollution report cards describing (objective) outdoor and indoor pollution levels, the effect of pollution on productivity (as measured in part one) and the protective effects of air pollution masks. At the end, both factory owners and factory workers from the treatment and control group will be asked to take part in a real-stakes experiment to elicit their willingness to pay for face masks.

In the absence of regulatory enforcement, it is critical to understand the extent to which defensive investments can reduce damages from air pollution and whether these pass a cost-benefit analysis. Willingness to pay for environmental improvements is a first-order policy measure that allows regulators to design optimal environmental policy. Few revealed preference estimates exist for air pollution in the developing world, and none for Bangladesh. Generating such estimates in developing countries is of paramount importance since such measures can differ vastly across developed and developing countries due to factors such as income, different baseline levels of pollution, etc. The measure generated in this project for willingness to pay for defensive investments can inform overall cost-benefit analysis for a range of pollution-reduction measures being considered by the Government of Bangladesh and others.


Teevrat Garg

University of California, San Diego

Maulik Jagnani

University of Colorado Denver