Air Quality Benefit Analysis for Los Angeles and San Francisco Based on Housing Values and Visibility

摘要

Benefits of improved air quality are estimated by examining the public's willingness to pay for visibility as revealed in home sale prices. The investigation is conducted for the 1978-79 period in two study areas, Los Angeles (four counties) and San Francisco (five counties). The analysis uses an extremely large, finely resolved data set for visibility levels, home sale prices, and house/community/location/socio-economic characteristics. The data are gathered from 39 airport weather stations (visibility), the Market Data Cooperative (home sale prices and house specific characteristics), as well as the Census and other data sources (other characteristics). The economic analysis follows the hedonic price method. First, home sale price is related statistically to visibility and the house/community/location/socio-economic characteristics. Next, the hedonic price for visibility is related to visibility levels and income levels in order to determine the economic (inverse) demand curve. This demand curve in turn yields estimates of benefits. It is found that, depending on assumed functional form, a 10% improvement in visibility would produce benefits of 250-617 million dollars per year in Los Angeles and 190-220 million dollars per year in San Francisco.