Willingness to Pay for Reducing Indoor Air Pollution: Study of Rural
Indian Households
Mriduchhanda Chattopadhyay1
Abstract
1. Introduction:
Indoor air pollution (IAP, hereafter) caused by the incomplete combustion of traditional
cooking fuels along with inefficient cooking practices have remained a potentially large healththreat (Duflo et al., 2008) especially in developing economies. Despite the efforts and expected
positive returns from adopting modern cooking technologies/fuels, significantly large
population in developing countries continue to rely on traditional cooking fuels to meet theirhousehold energy demand. To have a clear understanding of what motivates individuals’
decision to adopt preventive behaviour from IAP, we need to understand their valuation of thehealth risks related to IAP. In this paper, we investigate how much the individuals are valuing
the reduction in health risks related to IAP from adopting preventive measure using contingent
valuation method (CVM, hereafter). In particular, we estimate the individuals’ willingness topay (WTP, hereafter) for a hypothetical preventive measure from IAP which stands as aquantitative measure of individuals’ valuation of health risk reduction.
2.

Econometric model and study design:

Since the individuals’ true willingness to pay is unobservable, we can construct their WTP
from an empirical analysis that includes the potential determinant of WTP (Gelo and Koch,2015). To estimate the individuals’ WTP, we exploit double-bounded dichotomous choicemethod (DBDC, hereafter) because of its statistical efficiency (Lang et al., 2010). In thismethod, the individual faces two take-it or leave-it bids, related to her WTP which she canaccept or reject. We use this observable set of bid responses to obtain her WTP using themaximum likelihood estimation method.
For the analysis, we use a unique dataset of 557 respondents from rural India collected during
December 2017- January 2018. Our respondents are the individuals responsible for cooking.
_____________
1

Graduate School of Economics, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050, Japan
Telephone: +81-080-4193-2931; E-mail: mriduchhanda29@gmail.com

1During the survey, the enumerators referred to the installation of appliances like exhaust fansthat would reduce the exposure of IAP to give an example of a hypothetical preventive measure.
It should be noted that the enumerators explained that the payments shall be a one-time one.
To avoid initial bid bias, we randomly assign three different initial bids to the respondent. We
designed the DBDC questionnaire such that the follow-up bid was doubled if the respondent
has replied “yes” to the initial bid and it was reduced to half if she has replied no.
3. Results:
Table 1: Determinants of WTP
The average WTP of individuals in rural areas for
adopting the preventive measure is INR 704.91(~$10) which is approximately 9% of theiraverage monthly income. The individuals arewilling to pay this amount on average possibly
because this is a one-time investment. The main
factors that affect the individuals’ WTP include
income, household decision-making authority,age, occupation of the spouse and bid payments.
Interestingly, individuals who had suffered fromphysical symptoms related to IAP are willing topay more for the preventive measure. Finally, we
find cooking practices of the individuals plays
some role in determining the individuals’ WTP.

Initial Bid (log)
Follow up Bid (log)Age of the respondent

Acceptinitial bid-0.889***(0.074)

Acceptfollow-up bid-0.692***(0.107)-0.01*(0.006)0.442*(0.241)0.014(0.146)0.021(0.019)0.27**(0.135)0.358**(0.15)
Yes-0.014**(0.006)
Decision making
0.486*
authority(0.268)Spouse works in
0.322*
agricultural sector(0.174)
Household expenditure
0.045**(0.022)Use clean cooking fuels
0.502***(0.146)Sick with symptoms
0.511***
related to IAP(0.165)Controls
YesRho0.242**(0.123)
Robust standard error in the parentheses; *** p<0.01; **p<0.05; * p<0.1

Reference:
1. Duflo, E., Greenstone, M., & Hanna, R. (2008). Indoor air pollution, health andeconomic well-being. SAPI EN. S. Surveys and Perspectives Integrating Environmentand Society, (1.1).
2. Gelo, D., & Koch, S. F. (2015). Contingent valuation of community forestry programsin Ethiopia: Controlling for preference anomalies in double-bounded CVM. Ecological
Economics, 114, 79-89.
3. Lang, H. C. (2010). Willingness to pay for lung cancer treatment. Value inhealth, 13(6), 743-749.
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