Suspended particulate matter (SPM), dust, fumes and gases from cement production can result in a range of health effects to households living around factories. This study estimates the health costs associated with air pollution from a cement factory in the district of Puttalam in Sri Lanka. The study uses field data collected from 500 households living within a 3 km radius of the factory and measures seasonal air pollution to estimate dose-response functions and mitigation cost functions for different respiratory illnesses. The results indicate that the incidence of respiratory illness is about 14% amongst individuals who live in the vicinity of the cement factory.