Risk-Avoidance and Environmental Hazard: Effects of Transboundary Haze Pollution in Singapore Sumit Agarwal #1 , Tien Foo Sing *2 and Yang Yang *3 This version: August 31, 2017 Abstract This paper examines the risk-avoidance behaviors of households in response to environmental hazards using the transboundary haze caused by forest fires in Indonesia as an exogenous shock. Using a unique panel dataset of hourly water consumption at the household level, monthly electricity consumption at the building level, and daily hotel performance indices obtained from multiple sources, this study finds significant positive responses in household utilities consumptions and economic losses in the hotel industry when transboundary haze occurs in Singapore. This study offers three key findings. First, we find evidence from the within-the-day variations and between the weekday to weekend variations in household water consumption that confirms the risk-avoidance responses of households during haze periods. People stay indoors to minimize their exposure to the possible health risks caused by the haze pollutants. These findings are robust to numerous specification checks as well as to when the perceived risk measures obtained from social media are used. Second, we find the long-term persistence of household responses via the high electricity consumption during the two-month haze period; however, electricity consumption responses revert to normal after the haze dissipates. Third, the hotel industry suffers significant losses during the haze period, which is evidence that could suggest the risk-avoidance of foreign visitors, who are informed of the transboundary haze alerts. Keywords: Transboundary air pollution, haze, environmental externalities, risk-avoidance economic activities, household utilities JEL Code: D12, F62, Q53, Q54 # McDonough School of Business, Georgetown University, 3700 O Street NW, Washington DC, 20057. * Department of Real Estate, School of Design Environment, National University of Singapore, 4 Architecture Drive, Singapore 117566. 1: Email: rstagarw@nus.edu.sg; ushakri@yahoo.com.Telephone: 1-202-687-8207. 2: Email: rststf@nus.edu.sg 3: Email: zoeyangyang@gmail.com We would like to thank the National Environmental Agency (NEA) and Public Utilities Board (PUB) for sharing the electricity consumption and water data used in this study. We would also like to thank Daniel McMillen, Tsur Somerville, Yuming Fu and participants in the “Asian Green Cities” Workshop in Tsinghua University, Beijing, China, for their valuable comments and suggestions.