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The Value of Ozone Air Quality Improvements to Renters: Evidence From Apartment Building Transactions in Los Angeles County

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  • Hitaj, Claudia
  • Lynch, Lori
  • McConnell, Kenneth E.
  • Tra, Constant I.

Abstract

We investigate the relationship between the sale prices of apartment buildings and ozone levels in Los Angeles. The hedonic estimation controls for the potential bias resulting from the endogeneity of air pollution measures. We find that renters' valuations for air quality are capitalized into the asset price of apartment buildings. For a 1% reduction in the 1990 ambient air pollution level, renters' annual marginal willingness to pay (MWTP) is estimated at $14 to $52 in constant 2010 dollars. These estimates are somewhat smaller than current MWTP estimates from the owner-occupied single family house literature.

Suggested Citation

  • Hitaj, Claudia & Lynch, Lori & McConnell, Kenneth E. & Tra, Constant I., 2018. "The Value of Ozone Air Quality Improvements to Renters: Evidence From Apartment Building Transactions in Los Angeles County," Ecological Economics, Elsevier, vol. 146(C), pages 706-721.
    • Handle: RePEc:eee:ecolec:v:146:y:2018:i:c:p:706-721
    DOI: 10.1016/j.ecolecon.2017.12.022
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    Cited by:

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    3. Madad, A. & Gharagozlou, A. & Majedi, H. & Monavari, S.M., 2019. "A quantitative representation of the urban green building model, focusing on local climatic factors by utilizing monetary valuation," Ecological Economics, Elsevier, vol. 161(C), pages 61-72.
    4. Kaida Chen & Hanliang Lin & Lingyun Liao & Yichen Lu & Yen-Jong Chen & Zehua Lin & Linxi Teng & Aifang Weng & Tianqi Fu, 2022. "Nonlinear Rail Accessibility and Road Spatial Pattern Effects on House Prices," Sustainability, MDPI, vol. 14(8), pages 1-24, April.
    5. Choi, Anna & Kim, Pureum & Park, Abraham, 2023. "The effects of air quality on housing prices: Evidence from the Aliso Canyon gas leak," Journal of Housing Economics, Elsevier, vol. 62(C).
    6. Wang, Jianing & Lee, Chyi Lin, 2022. "The value of air quality in housing markets: A comparative study of housing sale and rental markets in China," Energy Policy, Elsevier, vol. 160(C).

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    More about this item

    Keywords

    Air quality; Ozone; Hedonic price regression; Instrumental variables; Rational expectations;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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