JOURNAL OF ENVIRONMENTAL ECONOMICS AND MANAGEMENT 8, 32 l-329 ( 198 I) Averting Expenditure and the Cost of Pollution’

The paper considers the relationship between the willingness to pay for environmental quality and averting expenditures-that is, the costs of measures undertaken in efforts to counteract the consequences of pollution. The models used assume perfect mobility among locations with different levels of environmental quality. The major results are: (I) Averting expenditures are not in general a good measure of willingness to pay; (2) averting expenditures are not always even a lower bound on willingness to pay; (3) even when averting expenditures are a lower bound, the difference between the level of such expenditures and willingness to pay carmot be attributed to the unavertible “aesthetic ” consequences of pollution. For almost every kind of environmental unpleasantness we face, there are averting expenditures we can make to reduce, and sometimes completely remove, the damage. For air pollution, house paint, air conditioners, soap; for water pollution, wells, bottled water, purifiers; for noise pollution, storm windows, thicker walls. Economists have long been aware that averting behavior is both possible and practiced, and they have often suggested that expenditures on such behavior can be used as a measure of the costs imposed on society by various forms of pollution. The literature on thi