Hedonic Price Model and Valuation of Marginal Willingness to Pay for Air Quality in Metropolitan Tabriz

Several environmental goods and services are not traded in markets. This has serious consequences for private decision making. Economists have used methods for valuing goods and services provided by the environment. In this paper we have applied a method named Hedonic Price to estimate the household’s marginal willingness to pay (MWTP) of for air quality improvement in metropolitan Tabriz. Results of a survey of 1023 households show that the technique works satisfactorily. Air pollution has a significant negative effect on property values in the polluted areas. The average households MWTP for a unit decrease in air pollutant is estimated about 110000 Rials. This shows that rent of houses located in relatively pollutd areas is less than those located in non polluted area.