Cost-of-illness and willingness-to-pay estimates of the benefits of improved air quality: Evidence from Taiwan

We compare cost-of-illness (COI) and willingness-to-pay (WTP) estimates of the damages from minor respiratory symptoms associated with air pollution, using data from a study in Taiwan in 1991-92. A contingent valuation survey was conducted to estimate WTP to avoid minor respiratory illnesses. Health diaries were analyzed to predict the likelihood and cost of seeking relief from symptoms and of missing work. As predicted by economic theory, WTP is greater than the COI estimates, exceeding the latter by 1.61 to 2.26 rimes, depending on pollution levels. These ratios are similar to those for the United States, despite the differences between the two countries. (JEL Q25).