Haze Attitudes and the Willingness to Pay for Haze Improvement: Evidence from Four Cities in Shandong Province, China

Background: Given the health and welfare impacts of haze, haze reduction governance challenges Chinese policy-makers. Surprisingly, there have been no studies of the differences in the public's willingness to pay (WTP) for haze governance within a province. Yet haze reduction policies are implemented at the provincial level. Based on the contingent valuation method, data on WTP for haze governance across four industrial cities in Shandong province were collected using a questionnaire survey. Method: A combination of stratified sampling and non-probability sampling methods were used, yielding a valid sample of 1006 respondents. The Heckman sample selection model was used to analyze factors determining WTP and WTP amount. Results: 53% of respondents were unwilling to pay for haze reduction, while less than 1% of these respondents were satisfied with Shandong's air quality. About half (47%) of the respondents were willing to pay, on average, US$14.14 per household per year for haze governance. We found that there were significant inter-city differences in the WTP and WTP amounts: those with a higher income, education, haze knowledge, and haze concern were WTP; age, marital status, and subjective indicators displayed a negative relationship with WTP amount. About two thirds of the non-payers, and those with poor environmental knowledge, argued that air quality improvement was mainly the responsibility of governments (39.3%) and polluters (25.6%), instead of ordinary citizens. Further, 27% of non-payers said that their income was too low to contribute to a pollution tax and 6.3% claimed that they did not believe the funds would be used effectively for environmental conservation. Conclusions: City-specific differences in WTP may caution against "one size fits all" policies. The study indicates that the government may need to target policies to specific cities and the characteristics of residents in those cities by age, education, and income groups and residents' subjective evaluation of the government and the haze problem and those responsible for pollution.