Working Paper: CEPR ID: DP13811
Authors: Gabriel Ahlfeldt; Volker Nitsch; Nicolai Wendland
Abstract: 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.
Keywords: accessibility; spatial differencing; noise; difference-in-differences; income elasticity; land price
JEL Codes: R12; R14; R41; N73; N74
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| 10-decibel decrease in rail noise (R41) | increase in land prices (R31) |
| increase in incomes (E25) | increase in value placed on noise reduction (Q51) |
| one-kilometer reduction in distance from nearest metro station (R23) | decrease in capitalization effect (G31) |
| increase in incomes (E25) | increase in income elasticity of access amenity value (R22) |
| metro rail accessibility (L91) | increase in land prices (R31) |
| noise disamenities (Q53) | decrease in land prices (R31) |