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The pollution levels in the capital sets new record every year with the issue emerging as one most challenging to tackle for both people and the government. The site of the present study is Dwarka, one of the largest residential colony in Asia. The study estimates WTP (willingness to pay) annually for a hypothetical government program aimed at reducing the pollution by 66% from the present level in next five years. The economic valuation has been done using stated preference method namely, Contingent Valuation Method. In addition to this, Cost of self-protection (CSP) against air pollution is also estimated by employing revealed preference method. The expected value for a positive WTP is Rs.1432.50 and the expected value for a positive CSP is Rs.8901.53. Therefore, the hypothetical bias, i.e the difference between the two values is Rs.7469.03.WTP and CSP were regressed against demographic, socio-economic, risk perception and attitude factors in two models namely, probit model and multilinear regression model. The econometric exercise facilitates analysis of how these factors under consideration influence the two amounts. Average monthly family income, marital status, government trust, perceived risk, risk benefits, personal protection trust, awareness and knowledge, perception regarding benefits of risk management, respiratory condition, number of family members, education are some of the significant variables obtained in the analysis. Such results give a better insight to policy makers for framing effective taxation policies and facilitate air pollution regulation.
