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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]
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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 

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