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

Abstract: Credible estimates of the cost of traffic noise are crucial to the assessment of the merits of noise control policies. This study estimates the cost of aircraft noise by measuring its capitalization into housing prices following an unexpected renewal of the operating contract for a local airport. The results show that a one decibel increase in aircraft noise leads to a reduction in housing values of 0.3 percent, or $1,200, on average. The capitalization rate is larger the higher is the property’s value, size and standard which suggest that owners of these houses benefit relatively more from noise abatement measures.

Keywords: noise pollution; value of environmental goods

JEL-codes: Q51; Q53; R23; R31; R41

33 pages, First version: September 11, 2018. Revised: February 26, 2019.

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