The aim of present article is determining economic value of air pollution and environmental effects of Mashhad city air pollution. Data of 286 households of Mashhad was gathered through questionnaire in a survey reaserch using stratified random sampling method in year 2006. In order to detemine environmental effects of air pollution choice experiment approach - which gives the most perfect environmental total economic value - conditional logit (CL) and nested logit (NL) models, have been applied. On this base, for a thirty percent improvement in bad odour, black fallout, poor visibility and health effects of air pollution, high-polluted region settlers are willing to pay, in average, 751, 912, 1526 and 1607 Rials per month, respectively. Whilst, middle-polluted region settlers, are willing to pay 595, 802, 1263 and 1453 Rials per month for 30 percent improvement in bad odour, poor visibility, black fallout and health effects of air pollution, respectively. Therefore, value of a thirty percent improvement in Mashhad air pollution is equal to 11303472650 Rials per month.
JEL Classification: C01, C25, C99, H23, Q51, Q52, Q53