DP13811 Ease vs. noise: Long-run changes in the value of transport (dis)amenities

Author(s):	Gabriel Ahlfeldt, Volker Nitsch, Nicolai Wendland
Publication Date:	June 2019
Keyword(s):	accessibility, Difference-in-Differences, income elasticity, land price, noise, Spatial differencing
JEL(s):	N73, N74, R12, R14, R41
Programme Areas:	International Trade and Regional Economics, Economic History
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=13811

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.