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Air pollution is among the major causes of death and disease all around the globe. The prime impact of ambient air pollution is on the lungs through the respiratory system. This study aims to estimate the health cost due to air pollution from a Sugar Mill in the Mardan district of Khyber Pakhtunkhwa, Pakistan. To determine the impact of pollution on respiratory illness, primary data were collected from 1141 individuals from 200 households living within a 3 km radius of the mill. The Household Production Method was used to drive the reduced-form Dose–Response Function and the Mitigation Cost Function for assessing the impact of pollution on health and then estimating the monetary cost associated with mitigating such illnesses. The results indicate that about 60% of the respondents living in the surrounding area of the mill suffered from different respiratory illnesses. The study estimates that by reducing the suspended particulate matter (SPM) level by 50%, the expected annual welfare gains to an individual living within a 3 km radius of the mill are US $20.21. The whole community residing within a 3 km radius of the mill will enjoy an estimated welfare gain of PKR. 70.67 million (US $0.511 million). If the pollution standard limits prescribed by the World Health Organization are followed, the expected monetary benefits to all the individuals living within a 3 km radius of the mill are PKR. 114.48 million (US $0.27 million) annually.

Quantifying the Health and Wealth Benefits of Reducing Point Source Pollution: The Case of the Sugar Industry in Pakistan