Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2012:27: Estimating non-marginal willingness to pay for railway noise abatement: application of the two-step hedonic regression technique

Jan-Erik Swärdh (), Henrik Andersson , Lina Jonsson () and Mikael Ögren ()
Additional contact information
Jan-Erik Swärdh: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Henrik Andersson: Toulouse School of Economics (LERNA)
Lina Jonsson: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Mikael Ögren: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: In this study we estimate the demand for peace and quiet, and thus also the willingness to pay for railway noise abatement, based on both steps of the hedonic model regression on property prices. The estimated demand relationship suggests welfare gains for a 1 dB reduction of railway noise as; USD 162 per individual per year at the baseline noise level of 71 dB, and USD 86 at the baseline noise level of 61 dB. Below a noise level of 49.1 dB, individuals have no willingness to pay for railway noise abatement. Our results also show the risk of using benefit transfer, i.e. we show empirically that the estimated implicit price for peace and quiet differs substantially across the housing markets. From a policy perspective our results are useful, not only for benefit-cost analysis, but also as the monetary component on infrastructure use charges that internalize the noise externality.

Keywords: Benefits transfer; Hedonic regression; Railway noise; Willingness to pay

JEL-codes: C21; C26; Q51; Q53

36 pages, November 22, 2012

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