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Effect of air pollution on house prices: Evidence from sanctions on Iran

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  • Amini, Amirhossein
  • Nafari, Kaveh
  • Singh, Ruchi

Abstract

We analyze the causal effect of air pollution on Iran's housing market by exploiting increases in air pollution due to sanctions that targeted gasoline imports. In response to the sanctions, Iran converted petrochemical plants into refineries that produced low-quality gasoline, which led to a drastic and heterogeneous increase in air pollution across neighborhoods in Tehran. Using unique administrative data on Tehran's housing market, we estimate a fixed effects model that exploits this variation in air pollution and compares housing values within neighborhoods over time. We find that a 10 ​% increase in the outdoor concentration of nitrogen dioxide leads to a decrease in housing prices of around 0.6 ​%–0.8 ​%.

Suggested Citation

  • Amini, Amirhossein & Nafari, Kaveh & Singh, Ruchi, 2022. "Effect of air pollution on house prices: Evidence from sanctions on Iran," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:regeco:v:93:y:2022:i:c:s0166046221000806
    DOI: 10.1016/j.regsciurbeco.2021.103720
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