Hostname: page-component-cd4964975-pf4mj Total loading time: 0 Render date: 2023-03-30T02:28:22.851Z Has data issue: true Feature Flags: { "useRatesEcommerce": false } hasContentIssue true

How much are urban residents in Mexico willing to pay for cleaner air?

Published online by Cambridge University Press:  18 February 2013

Fidel Gonzalez
Department of Economics and International Business, Sam Houston State University, 232 Smith-Hutson Building, Huntsville, TX 77341, USA. Tel: (936) 294-4796. E-mail:
Mark Leipnik
Department of Geography and Geology, Sam Houston State University, USA. E-mail:
Diya Mazumder
Social and Behavioral Sciences, Soka University of America, USA. E-mail:


We estimate the marginal willingness-to-pay for PM10 abatement in the three largest Mexican cities. We use a unique data set with actual market transactions at the household level from January 2003 to May 2004 and observed PM10 concentrations. We follow an instrumental variable approach to mitigate bias from omitted variables. We exploit the seasonality in PM10 concentrations due to rainfall patterns in those cities to construct a valid instrument for PM10. We find the house price–pollution elasticity to be around − 0.07 for Mexico City, − 0.05 for Guadalajara, and − 0.07 for Monterrey, implying that one unit reduction in PM10 levels is valued at US$41.73, 36.34 and 43.47, respectively. Our results indicate that urban residents of Mexico are willing to pay for cleaner air.

Research Article
Copyright © Cambridge University Press 2013

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)



Anselin, L. and Gallo, J. (2006), ‘Interpolation of air quality measures in hedonic house price models: spatial aspects’, Spatial Economic Analysis 1(1): 17421780.CrossRefGoogle Scholar
Bartik, T. (1987), ‘The estimation of demand parameters in hedonic price models’, Journal of Political Economy 95(1): 8188.CrossRefGoogle Scholar
Boyle, M. and Kiel, K. (2001), ‘A survey of house price hedonic studies of the impact of environmental externalities’, Journal of Real Estate Literature 9(2): 117144.Google Scholar
Brechin, S. (1999), ‘Objective problems, subjective values, and global environmentalism: evaluating the postmaterialist argument and challenging a new explanation’, Social Science Quarterly 80(4): 793809.Google Scholar
Brown, J.N. and Rosen, H.S. (1982), ‘On the estimation of structural hedonic price models’, Econometrica 50(3): 765768.CrossRefGoogle Scholar
Cassel, E. and Mendelsohn, R. (1985), ‘The choice of functional forms for hedonic price equations: comment’, Journal of Urban Economics 18(2): 135142.CrossRefGoogle Scholar
Chay, K.Y. and Greenstone, M. (2005), ‘Does air quality matter? Evidence from the housing market’, Journal of Political Economy 113(2): 376424.CrossRefGoogle Scholar
Conafovi (Comision Nacional de Fomento a la Vivienda) (2002–2004), Estadística de vivienda, D.F., Mexico: Conafovi.Google Scholar
Conagua (Comision Nacional del Agua) (2008), Programa hidrico nacional, D.F., Mexico: Conagua.Google Scholar
Conapo (Comision Nacional de Poblacion) (2007), Delimitación de las zonas metropolitanas de Mexico 2005, D.F., Mexico: Conapo.Google Scholar
Cropper, M., Deck, L., and McConnell, K. (1988), ‘On the choice of functional form for hedonic price functions’, Review of Economics and Statistics 70(4): 668675.CrossRefGoogle Scholar
Deacon, R., Brookshire, D., Fisher, A., et al. (1998), ‘Research trends and opportunities in environmental and natural resource economics’, Environmental and Resource Economics 11(3–4): 383397.CrossRefGoogle Scholar
Dunlap, R. and York, R. (2008), ‘The globalization of environmental concern and the limits of the postmaterialist values explanation: evidence from four multinational surveys’, Sociological Quarterly 49(3): 529563.CrossRefGoogle Scholar
Epple, D. (1987), ‘Hedonic prices and implicit markets: estimating demand and supply functions for differentiated products’, Journal of Political Economy 95(1): 5980.CrossRefGoogle Scholar
Graves, P., Murdoch, J., Thayer, M., and Waldman, D. (1988), ‘The robustness of hedonic price estimation: urban air quality’, Land Economics 64(3): 220233.CrossRefGoogle Scholar
INE (Instituto Nacional de Ecologia) (2003), Segundo almanaque de datos y tendencias de la calidad del aire en seis ciudades Mexicanas, D.F., Mexico: INE.Google Scholar
INE (Instituto Nacional de Ecologia) (2007), Tercer almanaque de datos y tendencias de la calidad del aire en nueve ciudades Mexicanas, D.F., Mexico: INE.Google Scholar
INE (Instituto Nacional de Ecologia) (2010), Sistema Nacional de Informacion de la Calidad del Aire: informacion sobre las redes, D.F., Mexico: INE.Google Scholar
Kim, C., Phipps, T., and Anselin, L. (2003), ‘Measuring the benefits of air quality improvement: a spatial hedonic approach’, Journal of Environmental Economics and Management 45(1): 2439.CrossRefGoogle Scholar
Kwak, S. and Chun, L. (1996), ‘Estimation of the benefit of air quality improvement: an application of hedonic price technique in Seoul’, in Mendelsohn, R. and Shaw, D. (eds), The Economics of Pollution Control in the Asia Pacific, Cheltenham: Edward Elgar Publishing, pp. 171181.Google Scholar
Li, M. and Brown, H. (1980), ‘Micro-neighbourhood externalities and hedonic housing prices’, Land Economics 56(2): 125141.CrossRefGoogle Scholar
Mugica, V., Maubert, M., Torres, M., Munoz, J., and Rico, E. (2002), ‘Temporal and spatial variations of metal content in TSP and PM10 in Mexico City during 1996–1998’, Aerosol Science 33(1): 91102.CrossRefGoogle Scholar
Palmquist, R. (1982), ‘Measuring the environmental effects on property values without hedonic regressions’, Journal of Urban Economics 11(3): 333347.CrossRefGoogle Scholar
Palmquist, R. (1991), ‘Hedonic methods’, in Braden, J.B. and Kolstad, C.D. (eds), Measuring the Demand for Environmental Quality, Amsterdam: Elsevier, pp. 77120.Google Scholar
Querol, X., Pey, J., Minguillon, M.C., et al. (2008), ‘PM speciation and sources in Mexico during the MILAGRO-2006 Campaign’, Atmospheric Chemistry and Physics 8: 111128.CrossRefGoogle Scholar
Ridker, R. (1967), Economic Costs of Air Pollution: Studies in Measurement, New York: Praeger.Google Scholar
Ridker, R. and Henning, J. (1967), ‘The determinants of residential property values with special reference to air pollution’, Review of Economics and Statistics 49(2): 246257.CrossRefGoogle Scholar
Rosen, S. (1974), ‘Hedonic prices and implicit markets: product differentiation in pure competition’, Journal of Political Economy 82(1): 3455.CrossRefGoogle Scholar
Ruijgrok, W. and Römer, F. (1993), ‘Aspects of wet, acidifying deposition in Arnhem: source regions, correlations, and trends’, Atmospheric Environment 27(A): 637653.CrossRefGoogle Scholar
Sepomex (Servicio Postal Mexicano) (2010), Consulta de codigos postales, D.F., Mexico: Sepomex.Google Scholar
Smith, V. and Deyak, T. (1975), ‘Measuring the impact of air pollution on property values’, Journal of Regional Science 15(3): 277288.CrossRefGoogle Scholar
Smith, V.K. and Huang, J.C. (1995), ‘Can markets value air quality? A meta-analysis of hedonic property value models’, Journal of Political Economy 103(1): 209227.CrossRefGoogle Scholar
SMN (Sistema Meteorologico Nacional) (2011), Normales climatologicas 1971–2000, D.F., Mexico: SMN.Google Scholar
UNDESA (United Nations Department of Economic and Social Affairs), Population Division (2012), World Urbanization Prospects: The 2011 Revision, New York: UN.Google Scholar
Valle-Hernandez, B., Mugica, V., Salinas, E., Amador, O., Murillo, M., Villalobos, R., and De Vizcaya, A. (2010), ‘Temporal variation of nitro-polycyclic aromatic hydrocarbons in PM10 and PM2.5 collected in Northern Mexico City’, Science of the Total Environment 408: 54295438.CrossRefGoogle Scholar
WHO/UNEP (World Health Organization, United Nations Environment Programme) (1992), Urban Air Pollution in Megacities of the World, Oxford: Blackwell.Google Scholar
Wieand, K. (1973), ‘Air pollution and property values: a study of the St. Louis area’, Journal of Regional Science 13(1): 9195.CrossRefGoogle Scholar
Yang, C. (1996), ‘Hedonic housing values and benefits of air quality improvement in Taipei’, in Mendelssohn, R. and Shaw, D. (eds), The Economics of Pollution Control in the Asia Pacific, Cheltenham: Edward Elgar Publishing, pp. 150170.Google Scholar
Yusuf, A. and Resosudarmo, B. (2009), ‘Does clean air matter in developing countries’ megacities? A hedonic price analysis of the Jakarta housing market, Indonesia’, Ecological Economics 68(5): 13981407.CrossRefGoogle Scholar
Zabel, J. (2004), ‘The demand for housing services’, Journal of Housing Economics 13(1): 1635.CrossRefGoogle Scholar
Zabel, J. and Kiel, K. (1998), ‘The impact of neighborhood characteristics on house prices: what geographic area constitutes a neighborhood?’, Working Paper No. WP-98-04, Department of Economics, Wellesley College, Wellesley, MA.Google Scholar
Zabel, J. and Kiel, K. (2000), ‘Estimating the demand for air quality in four U.S. cities’, Land Economics 76(2): 174194.CrossRefGoogle Scholar