As China balances its need for economic growth and environmental quality, it is important that Chinese policymakers compare the costs and benefits of alternative policy options to ensure they are choosing the most efficient policies. EPIC-China will work with policymakers to conduct cost-benefit analyses based on real-world data.
Early work by EPIC scholars reveals the benefits of this approach. By studying the effects of the Huai River policy—under which people living north of the river were provided with free coal boilers and subsidized coal —EPIC Director Michael Greenstone, Guojun He (Director of Research, EPIC-China), and their coauthors found that people in the north live 3.1 fewer years than people in the south due to air pollution concentrations that are 46 percent higher.
In another study using the Huai River policy, EPIC scholar Koichiro Ito and his coauthor measured demand for air purifiers and found that Chinese households are on average willing to pay $1.34 per year to remove 1 μg/m3 of particulate pollution (PM10). This estimate suggests that a household is willing to pay $32.70 per year to eliminate the air pollution created by the Huai River heating policy. The authors also use this estimate to quantify the value of recent air quality improvements in China. Since China declared a war on pollution in 2013, particulate pollution decreased substantially, suggesting that a household is willing to pay at least $65.52 per year to have these air quality improvements.