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Abstract:

cover
CEP Discussion Paper
Ease Versus Noise: Long-Run Changes in the Value of Transport (Dis)amenities
Gabriel M. Ahlfeldt, Volker Nitsch and Nicolai Wendland June 2019
Paper No' CEPDP1631:
Full Paper (pdf)

JEL Classification: R12; R14; R41; N73; N74


Tags: accessibility; spatial differencing; noise; difference-in-differences; income elasticity; land price

For a complete cost-benefit analysis of durable infrastructures, it is important to understand how the value of non-market goods such as transit time and environmental quality changes as incomes rise in the long-run. We use difference-in-differences and spatial differencing to estimate the land price capitalization effects of metro rail in Berlin, Germany today and a century ago. Over this period, the negative effect of rail noise tripled in percentage terms. Our results imply long-run income elasticities of the value of noise reduction and transport access of 2.2 and 1.4, substantially exceeding cross-sectional contingent valuation estimates.