Hostname: page-component-cd9895bd7-dk4vv Total loading time: 0 Render date: 2024-12-23T19:13:49.704Z Has data issue: false hasContentIssue false
  • English
  • Français

Are land values related to ambient air pollution levels? Hedonic evidence from Mexico City

Published online by Cambridge University Press:  06 February 2019

Lopamudra Chakraborti ,
David Heres  and
Danae Hernandez
Lopamudra Chakraborti*
Affiliation:
Department of Economics, Centro de Investigacion y Docencia Economicas (CIDE), Aguascalientes, Mexico
David Heres
Affiliation:
Department of Economics, Centro de Investigacion y Docencia Economicas (CIDE), Mexico City, Mexico
Danae Hernandez
Affiliation:
University of California, Santa Barbara, USA
*
*Corresponding author. E-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

This article investigates whether residents of Mexico City value air quality. Our results suggest that air quality improvement in PM10 is equivalent to a marginal willingness to pay (MWTP) of US$440.31 per property for the period 2006–2013. The corresponding MWTP for PM2.5 is US$880.63, for O3 is US$623.78, and for SO2 is as much as US$2091.50. These estimates are considerably larger in magnitude compared to the few other studies in similar settings. As a percentage of annual household income, these represent 2.44 per cent for PM10, 4.88 per cent for PM2.5, 3.46 per cent for O3 and 11.59 per cent for SO2. Our estimates of land value–pollution elasticities for PM10 (−0.26 and − 0.58) are within range of hedonic estimates for total suspended particulate matter in US cities around the 1970s. The corresponding elasticities range from − 0.55 to − 0.84 for PM2.5, from − 0.06 to − 0.49 for O3 and from − 0.11 to − 0.34 for SO2.

Keywords

Air qualitydeveloping countrieshedonic pricesLatin Americawillingness to payQ51Q53Q56
Type
Research Article
Information
Environment and Development Economics , Volume 24 , Issue 3 , June 2019 , pp. 252 - 270
Copyright
Copyright © Cambridge University Press 2019 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Arceo-Gómez, EO, Hanna, R and Oliva, P (2016) Does the effect of pollution on infant mortality differ between developing and developed countries? Evidence from Mexico City. The Economic Journal 126, 257–280.Google Scholar
Bajari, P, Fruehwirth, JC, Kim, KI and Timmins, C (2012) A rational expectations approach to hedonic price regressions with time-varying unobserved product attributes: the price of pollution. The American Economic Review 102, 1898–1926.Google Scholar
Beatty, TK and Shimshack, JP (2014) Air pollution and children's respiratory health: a cohort analysis. Journal of Environmental Economics and Management 67, 39–57.Google Scholar
Cameron, AC and Miller, DL (2015) A practitioner's guide to cluster-robust inference. Journal of Human Resources 50, 317–372.Google Scholar
Carriazo, F, Ready, R and Shortle, J (2013) Using stochastic frontier models to mitigate omitted variable bias in hedonic pricing models: a case study for air quality in Bogota, Colombia. Ecological Economics 91, 80–88.Google Scholar
Chay, KY and Greenstone, M (2005) Does air quality matter? Evidence from the housing market. Journal of Political Economy 113, 376–424.Google Scholar
Cropper, ML, Deck, LB and McConnell, KE (1988) On the choice of functional form for hedonic price functions. The Review of Economics and Statistics 70, 668–675.Google Scholar
Currie, J and Neidell, M (2005) Air pollution and infant health: what can we learn from California's recent experience? The Quarterly Journal of Economics 120, 1003–1030.Google Scholar
Freeman, A (2003) The Measurement of Environmental and Resource Values: Theory and Methods. Washington, DC: Resources for the Future.Google Scholar
Gonzalez, F, Leipnik, M and Mazumder, D (2013) How much are urban residents in Mexico willing to pay for cleaner air? Environment and Development Economics 18, 354–379.Google Scholar
Gray, WB and Shadbegian, RJ (2004) ‘Optimal’ pollution abatement – whose benefits matter, and how much? Journal of Environmental Economics and Management 47, 510–534.Google Scholar
Gutierrez, E (2015) Air quality and infant mortality in Mexico: evidence from variation in pollution concentrations caused by the usage of small-scale power plants. Journal of Population Economics 28, 1181–1207.Google Scholar
Hanna, BG (2007) House values, incomes, and industrial pollution. Journal of Environmental Economics and Management 54, 100–112.Google Scholar
Kuminoff, NV, Smith, VK and Timmins, C (2013) The new economics of equilibrium sorting and policy evaluation using housing markets. Journal of Economic Literature 51, 1007–1062.Google Scholar
Leggett, CG and Bockstael, NE (2000) Evidence of the effects of water quality on residential land prices. Journal of Environmental Economics and Management 39, 121–144.Google Scholar
Molina, LT and Molina, MJ (2004) Improving air quality in megacities: Mexico City case Study. Annals of the New York Academy of Sciences 1023, 142–158.Google Scholar
Ribardière, A and Valette, J-F (2017) Geography of real estate prices in Mexico City: variability and heterogeneity of values recorded in online advertisements. Cybergeo: European Journal of Geography DOI:10.4000/cybergeo.28529.Google Scholar
Rodriguez-Sanchez, JI (2014) Do Mexicans care about air pollution? Latin American Economic Review 23, 1–24.Google Scholar
Rosen, S (1974) Hedonic prices and implicit markets: product differentiation in pure competition. Journal of Political Economy 82, 34–55.Google Scholar
SEDEMA (2016a) Inventario de emisiones de la CDMX 2014. Secretaría del Medio Ambiente del Gobierno de la Ciudad de México. Available at http://www.aire.cdmx.gob.mx/descargas/publicaciones/flippingbook/inventario-emisiones-cdmx2014-2/IE-CDMX-2014.pdf (in Spanish).Google Scholar
SEDEMA (2016b) Calidad del aire en la Ciudad de México. Informe 2015. Secretaría del Medio Ambiente del Gobierno de la Ciudad de México. Available at http://www.aire.cdmx.gob.mx/descargas/publicaciones/flippingbook/informe_anual_calidad_aire_2015v3/files/downloads/Informe2015v3.pdf (in Spanish).Google Scholar
Smith, VK and Huang, JC (1995) Can markets value air quality? A meta-analysis of hedonic property value models. Journal of Political Economy 103, 209–227.Google Scholar
Won Kim, C, Phipps, TT and Anselin, L (2003) Measuring the benefits of air quality improvement: a spatial hedonic approach. Journal of Environmental Economics and Management 45, 24–39.Google Scholar
Yusuf, AA and Resosudarmo, BP (2009) Does clean air matter in developing countries' megacities? A hedonic price analysis of the Jakarta housing market, Indonesia. Ecological Economics 68, 1398–1407.Google Scholar
Zabel, JE and Kiel, KA (2000) Estimating the demand for air quality in four U.S. cities. Land Economics 76, 174–194.Google Scholar