Valuing Environmental Impact of Air Pollution in Moscow with Hedonic Prices
The main purpose of this research is the calculation of implicit prices of the environmental level of air quality in the city of Moscow on the basis of housing property prices. The database used contains records of approximately 20 thousand apartments and has been provided by a leading real estate agency operating in Russia. The explanatory variables include physical characteristics of the houses, environmental (industry emissions), neighbourhood sociodemographic and geographic data: GPS coordinates of each house. The hedonic regression results for ecological variables show «negative» prices while increasing the level of air contamination from such substances as carbon monoxide, nitrogen dioxide, sulphur dioxide, and particles (CO, NO2, SO2, TSP). The marginal willingness to pay for higher environmental quality is presented for linear and log-log models.
[1] D. W. Dockery and C. A. Pope III, "Acute respiratory effects of
particulate air pollution," Annu. Rev. Public Health, vol. 15, pp. 107-
132, 1994.
[2] S. Bobylev, et al., "Macroeconomic Assessment of Environment Related
Human Health Damage Cost for Russia," Moscow State University,
Moscow, Russia, working paper, 2002.
[3] A. Golub et al., "Economic growth, fuel mix and air quality in Russia,"
Environmental Defense, Los Angeles, CA, Tech. Rep. 2003.
[4] B. R. Beloff, E.R. Beaver, and H. Massin, "Assessing societal costs
associated with environmental impacts," Environmental Quality
Management, vol. 10, no. 2, pp. 67-82, Winter 2000.
[5] W.M. Hanemann, "The economic theory of WTP and WTA," in Valuing
the Environment Preferences: Theory and Practice of the Contingent
Valuation Method in the US, EC and Developing Countries, I. Bateman
and K. Willis, Ed. New York: Oxford University Press, 1999, pp. 42.
[6] R. G. Ridker and John A. Henning, "The determinants of residential
property values with special reference to air pollution," The Review of
Economics and Statistics, vol. 49, no. 2, pp. 246-257, May, 1967.
[7] J. M. Tránchez Martín, "La heterogeneidad de la vivienda y el análisis
de precios hed├│nicos: una aproximaci├│n," Cuadernos de Informaci├│n
Econ├│mica, vol. 163, pp. 28-35, July&Aug. 2001.
[8] C. Won Kim, T. Phipps, and L. Anselin, "Measuring the benefits of air
quality improvement: a spatial hedonic approach," Journal of
Environmental Economics and Management, vol. 45, no.1, pp. 24-39,
Jan. 2003.
[9] C. Mardones, "Impacto de la percepci├│n de la calidad del aire sobre el
precio de las viviendas en concepci├│n-Talcahuano, Chile," Cuadernos
de Economía, vol. 43, pp. 301-329, Nov. 2006.
[10] J. P. Nelson, "Residential choice, hedonic prices, and the demand for
urban air quality," Journal of Urban Economics, vol. 5, no. 3, pp. 357-
369, July, 1978.
[11] J. E. Zabel and K. A. Kiel, "Estimating the demand for air quality in four
US cities," Land Economics, vol. 76, no. 2, pp. 174-194, May, 2000.
[12] K. J. Beron, J. Murdoch, and M. Thayer, "The benefits of visibility
improvement: new evidence from the Los Angeles metropolitan area,"
The Journal of Real Estate Finance and Economics, vol. 22, no. 2&3,
pp. 319-337, Mar. 2001.
[13] P. Amrusch, "The impact of urban traffic and environmental conditions
on the housing market: an analysis of Italian and Slovenian urban areas,"
Urban Transport and the Environment in the 21 Century, pp. 809-816,
2005.
[14] T. Eshet, M. G. Baron, M. Shechter, and O. Ayalon, "Measuring
externalities of waste transfer stations in Israel using hedonic pricing,"
Waste Management, vol. 27, no. 5, pp. 614-625, 2007.
[15] D. M. Brasington, D. Hite, "Demand for environmental quality: a spatial
hedonic analysis," Regional Science and Urban Economics, vol. 35, no.
1, pp. 57-82, 2005.
[16] M. Li, J. H. Brown, "Micro-neighbourhood externalities and hedonic
housing prices," Land Economics, vol. 56, no. 2, pp. 125-140, May,
1980.
[17] T. A. Deyak and V. K. Smith, "Residential property values and air
pollution: some new evidence," Quarterly Review of Economics and
Business, vol. 14, no. 4, pp. 93-100, 1974.
[18] S. Chattopadhyay, "Estimating the demand for air quality: new evidence
based on the Chicago housing market," Land Economics, vol. 75, no. 1,
pp. 22-38, Feb. 1999.
[19] J. C. Murdoch and M. A. Thayer, "Hedonic price estimation of variable
urban air quality," Journal of Environmental Economics and
Management, vol. 15, no. 2, pp. 143-146, June, 1988.
[20] A. C. Nelson, J. Genereux, M. Genereux, "Price effects of landfills on
house values," Land Economics, vol. 68, no. 4, pp. 359-365, Nov. 1992.
[21] M. A. Boyle, K. A. Kiel, "A Survey of House Price Hedonic Studies of
The Impact of Environmental Externalities," Journal of Real Estate
Literature, vol. 9, no. 2, pp. 117-144, 2001.
[22] S. Rosen, "Hedonic prices and implicit markets: product differentiation
in pure competition," Journal of Political Economy, vol. 82, no. 1, pp.
34-55, Jan.&Feb. 1974.
[23] K. Lancaster, "A new approach to consumer theory," Journal of
Political Economy, vol. 74, pp. 132-157, 1966.
[24] A. M. Freeman III, "Air pollution and property values, a further
comment," Review of Economics and Statistics, vol. 56, pp. 554-556,
Nov. 1974.
[25] A. C. Goodman and T. G. Thibodeau, "Housing Market Segmentation,"
Journal of Housing Economics, vol. 7, no. 2, pp. 121-143, June, 1998.
[26] M. C. Mateo Mateo, "Detecci├│n de la heteroscedasticidad," in
Econometr├¡a Modelos y Métodos, Albacete: Popular Libros, 2002, pp.
174-180.
[27] D. M. Gujarati, "Formas funcionales de los modelos de regresi├│n," in
Econometría, McGraw-Hill, 2003, pp. 163-177.
[28] V. K. Smith and J.-C. Huang, "Can market value air quality? A metaanalysis
of hedonic property value models," Journal of Political
Economy, vol. 103, no. l, pp. 209-227, Jan. 1995.
[29] B. Bender, T. J. Gronberg, and H. S. Hwang, "Choice of functional form
and the demands for air quality," Review of Economics and Statistics,
vol. 62, no. 4, pp. 638-643, Nov. 1980.
[30] R. J. Anderson and T. D. Crocker, "Air pollution and residential
property values," Urban Studies, vol. 8, no. 3, pp. 171-180, Oct. 1971.
[31] B. A. Smith, "Measuring the value of urban amenities," Journal of
Urban Economics, vol. 5, no. 3, pp. 370-387, July, 1978.
[32] R. B. Palmquist, "Estimating the demand for the characteristics of
housing," Review of Economics and Statistics, vol. 66, no. 3, pp. 394-
404, Aug. 1984.
[33] S. E. Atkinson and T. D. Crocker, "A Bayesian approach to assessing
the robustness of hedonic property value studies," Journal of Applied
Econometrics, vol. 2, no. 1, pp. 27-45, 1987.
[34] D. Appel, "Estimating the benefits of air quality improvement: An
hedonic price index approach applied to the New York metropolitan
area," Ph.D. dissertation, Rutgers Univ., NJ, 1980.
[35] P. F. Brucato, J. C. Murdoch, and M. A. Thayer, "Urban air quality
improvements: a comparison of aggregate health and welfare benefits to
hedonic price differentials," Journal of Environmental Management,
vol. 30, no. 3, pp. 265-279, Apr. 1990.
[1] D. W. Dockery and C. A. Pope III, "Acute respiratory effects of
particulate air pollution," Annu. Rev. Public Health, vol. 15, pp. 107-
132, 1994.
[2] S. Bobylev, et al., "Macroeconomic Assessment of Environment Related
Human Health Damage Cost for Russia," Moscow State University,
Moscow, Russia, working paper, 2002.
[3] A. Golub et al., "Economic growth, fuel mix and air quality in Russia,"
Environmental Defense, Los Angeles, CA, Tech. Rep. 2003.
[4] B. R. Beloff, E.R. Beaver, and H. Massin, "Assessing societal costs
associated with environmental impacts," Environmental Quality
Management, vol. 10, no. 2, pp. 67-82, Winter 2000.
[5] W.M. Hanemann, "The economic theory of WTP and WTA," in Valuing
the Environment Preferences: Theory and Practice of the Contingent
Valuation Method in the US, EC and Developing Countries, I. Bateman
and K. Willis, Ed. New York: Oxford University Press, 1999, pp. 42.
[6] R. G. Ridker and John A. Henning, "The determinants of residential
property values with special reference to air pollution," The Review of
Economics and Statistics, vol. 49, no. 2, pp. 246-257, May, 1967.
[7] J. M. Tránchez Martín, "La heterogeneidad de la vivienda y el análisis
de precios hed├│nicos: una aproximaci├│n," Cuadernos de Informaci├│n
Econ├│mica, vol. 163, pp. 28-35, July&Aug. 2001.
[8] C. Won Kim, T. Phipps, and L. Anselin, "Measuring the benefits of air
quality improvement: a spatial hedonic approach," Journal of
Environmental Economics and Management, vol. 45, no.1, pp. 24-39,
Jan. 2003.
[9] C. Mardones, "Impacto de la percepci├│n de la calidad del aire sobre el
precio de las viviendas en concepci├│n-Talcahuano, Chile," Cuadernos
de Economía, vol. 43, pp. 301-329, Nov. 2006.
[10] J. P. Nelson, "Residential choice, hedonic prices, and the demand for
urban air quality," Journal of Urban Economics, vol. 5, no. 3, pp. 357-
369, July, 1978.
[11] J. E. Zabel and K. A. Kiel, "Estimating the demand for air quality in four
US cities," Land Economics, vol. 76, no. 2, pp. 174-194, May, 2000.
[12] K. J. Beron, J. Murdoch, and M. Thayer, "The benefits of visibility
improvement: new evidence from the Los Angeles metropolitan area,"
The Journal of Real Estate Finance and Economics, vol. 22, no. 2&3,
pp. 319-337, Mar. 2001.
[13] P. Amrusch, "The impact of urban traffic and environmental conditions
on the housing market: an analysis of Italian and Slovenian urban areas,"
Urban Transport and the Environment in the 21 Century, pp. 809-816,
2005.
[14] T. Eshet, M. G. Baron, M. Shechter, and O. Ayalon, "Measuring
externalities of waste transfer stations in Israel using hedonic pricing,"
Waste Management, vol. 27, no. 5, pp. 614-625, 2007.
[15] D. M. Brasington, D. Hite, "Demand for environmental quality: a spatial
hedonic analysis," Regional Science and Urban Economics, vol. 35, no.
1, pp. 57-82, 2005.
[16] M. Li, J. H. Brown, "Micro-neighbourhood externalities and hedonic
housing prices," Land Economics, vol. 56, no. 2, pp. 125-140, May,
1980.
[17] T. A. Deyak and V. K. Smith, "Residential property values and air
pollution: some new evidence," Quarterly Review of Economics and
Business, vol. 14, no. 4, pp. 93-100, 1974.
[18] S. Chattopadhyay, "Estimating the demand for air quality: new evidence
based on the Chicago housing market," Land Economics, vol. 75, no. 1,
pp. 22-38, Feb. 1999.
[19] J. C. Murdoch and M. A. Thayer, "Hedonic price estimation of variable
urban air quality," Journal of Environmental Economics and
Management, vol. 15, no. 2, pp. 143-146, June, 1988.
[20] A. C. Nelson, J. Genereux, M. Genereux, "Price effects of landfills on
house values," Land Economics, vol. 68, no. 4, pp. 359-365, Nov. 1992.
[21] M. A. Boyle, K. A. Kiel, "A Survey of House Price Hedonic Studies of
The Impact of Environmental Externalities," Journal of Real Estate
Literature, vol. 9, no. 2, pp. 117-144, 2001.
[22] S. Rosen, "Hedonic prices and implicit markets: product differentiation
in pure competition," Journal of Political Economy, vol. 82, no. 1, pp.
34-55, Jan.&Feb. 1974.
[23] K. Lancaster, "A new approach to consumer theory," Journal of
Political Economy, vol. 74, pp. 132-157, 1966.
[24] A. M. Freeman III, "Air pollution and property values, a further
comment," Review of Economics and Statistics, vol. 56, pp. 554-556,
Nov. 1974.
[25] A. C. Goodman and T. G. Thibodeau, "Housing Market Segmentation,"
Journal of Housing Economics, vol. 7, no. 2, pp. 121-143, June, 1998.
[26] M. C. Mateo Mateo, "Detecci├│n de la heteroscedasticidad," in
Econometr├¡a Modelos y Métodos, Albacete: Popular Libros, 2002, pp.
174-180.
[27] D. M. Gujarati, "Formas funcionales de los modelos de regresi├│n," in
Econometría, McGraw-Hill, 2003, pp. 163-177.
[28] V. K. Smith and J.-C. Huang, "Can market value air quality? A metaanalysis
of hedonic property value models," Journal of Political
Economy, vol. 103, no. l, pp. 209-227, Jan. 1995.
[29] B. Bender, T. J. Gronberg, and H. S. Hwang, "Choice of functional form
and the demands for air quality," Review of Economics and Statistics,
vol. 62, no. 4, pp. 638-643, Nov. 1980.
[30] R. J. Anderson and T. D. Crocker, "Air pollution and residential
property values," Urban Studies, vol. 8, no. 3, pp. 171-180, Oct. 1971.
[31] B. A. Smith, "Measuring the value of urban amenities," Journal of
Urban Economics, vol. 5, no. 3, pp. 370-387, July, 1978.
[32] R. B. Palmquist, "Estimating the demand for the characteristics of
housing," Review of Economics and Statistics, vol. 66, no. 3, pp. 394-
404, Aug. 1984.
[33] S. E. Atkinson and T. D. Crocker, "A Bayesian approach to assessing
the robustness of hedonic property value studies," Journal of Applied
Econometrics, vol. 2, no. 1, pp. 27-45, 1987.
[34] D. Appel, "Estimating the benefits of air quality improvement: An
hedonic price index approach applied to the New York metropolitan
area," Ph.D. dissertation, Rutgers Univ., NJ, 1980.
[35] P. F. Brucato, J. C. Murdoch, and M. A. Thayer, "Urban air quality
improvements: a comparison of aggregate health and welfare benefits to
hedonic price differentials," Journal of Environmental Management,
vol. 30, no. 3, pp. 265-279, Apr. 1990.
@article{"International Journal of Business, Human and Social Sciences:55553", author = "V. Komarova", title = "Valuing Environmental Impact of Air Pollution in Moscow with Hedonic Prices", abstract = "The main purpose of this research is the calculation of implicit prices of the environmental level of air quality in the city of Moscow on the basis of housing property prices. The database used contains records of approximately 20 thousand apartments and has been provided by a leading real estate agency operating in Russia. The explanatory variables include physical characteristics of the houses, environmental (industry emissions), neighbourhood sociodemographic and geographic data: GPS coordinates of each house. The hedonic regression results for ecological variables show «negative» prices while increasing the level of air contamination from such substances as carbon monoxide, nitrogen dioxide, sulphur dioxide, and particles (CO, NO2, SO2, TSP). The marginal willingness to pay for higher environmental quality is presented for linear and log-log models.
", keywords = "Air pollution, environment, hedonic prices, real estate, willingness to pay.", volume = "3", number = "9", pages = "1770-8", }
