IDEAS home Printed from https://ideas.repec.org/p/een/ccepwp/2101.html
   My bibliography  Save this paper

Willingness to pay for clean air: Evidence from diesel vehicle registration restrictions in Japan

Author

Listed:
  • Shuhei Nishitateno

    (School of Policy Studies, Kwansei Gakuin University)

  • Paul J. Burke

    (Crawford School of Public Policy, Australian National University)

Abstract

This paper documents the effect of diesel vehicle registration restrictions introduced in Japan in 2001 in reducing suspended particulate matter (SPM) concentrations. The focus is on Aichi and Mie prefectures, home to a number of municipalities that were required to implement these restrictions in 2001. The paper then uses this intervention to estimate the causal effect of air pollution on land values. We obtain estimates of the elasticity of residential land prices with respect to SPM concentration of between –0.4 and –1.0. The revealed willingness to pay for the improvements in air quality induced by the intervention in Aichi and Mie is estimated at about US$7 billion. We also find evidence that net in-migration appears to be a key mechanism via which clean air was capitalized into higher land values. The results are robust to a number of estimation approaches and sample restrictions.

Suggested Citation

  • Shuhei Nishitateno & Paul J. Burke, 2021. "Willingness to pay for clean air: Evidence from diesel vehicle registration restrictions in Japan," CCEP Working Papers 2101, Centre for Climate & Energy Policy, Crawford School of Public Policy, The Australian National University.
    • Handle: RePEc:een:ccepwp:2101
    as

    Download full text from publisher

    File URL: https://ccep.crawford.anu.edu.au/sites/default/files/publication/ccep_crawford_anu_edu_au/2021-01/ccep2101_nishitateno_burke.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Masayuki Nakagawa & Makoto Saito & Hisaki Yamaga, 2009. "Earthquake Risks And Land Prices: Evidence From The Tokyo Metropolitan Area," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 208-222, June.
    2. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64(5), pages 416-416.
    3. Matthew E. Kahn, 2000. "Smog Reduction’s Impact on California County Growth," Journal of Regional Science, Wiley Blackwell, vol. 40(3), pages 565-582, August.
    4. Hanna, Brid Gleeson, 2007. "House values, incomes, and industrial pollution," Journal of Environmental Economics and Management, Elsevier, vol. 54(1), pages 100-112, July.
    5. Lucas W. Davis & Matthew E. Kahn, 2010. "International Trade in Used Vehicles: The Environmental Consequences of NAFTA," American Economic Journal: Economic Policy, American Economic Association, vol. 2(4), pages 58-82, November.
    6. Shuhei Nishitateno & Paul J. Burke, 2020. "Have Vehicle Registration Restrictions Improved Urban Air Quality In Japan?," Contemporary Economic Policy, Western Economic Association International, vol. 38(3), pages 448-459, July.
    7. Viard, V. Brian & Fu, Shihe, 2015. "The effect of Beijing's driving restrictions on pollution and economic activity," Journal of Public Economics, Elsevier, vol. 125(C), pages 98-115.
    8. Christopher F. Parmeter & Jaren C. Pope, 2013. "Quasi-experiments and hedonic property value methods," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 1, pages 3-66, Edward Elgar Publishing.
    9. Mark Hoekstra & Steven L. Puller & Jeremy West, 2017. "Cash for Corollas: When Stimulus Reduces Spending," American Economic Journal: Applied Economics, American Economic Association, vol. 9(3), pages 1-35, July.
    10. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    11. Grigolon, Laura & Leheyda, Nina & Verboven, Frank, 2016. "Scrapping subsidies during the financial crisis — Evidence from Europe," International Journal of Industrial Organization, Elsevier, vol. 44(C), pages 41-59.
    12. Prashant Bharadwaj & Matthew Gibson & Joshua Graff Zivin & Christopher Neilson, 2017. "Gray Matters: Fetal Pollution Exposure and Human Capital Formation," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 505-542.
    13. Atif Mian & Amir Sufi, 2012. "The Effects of Fiscal Stimulus: Evidence from the 2009 Cash for Clunkers Program," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 127(3), pages 1107-1142.
    14. Takatoshi Tabuchi, 1996. "Quantity Premia in Real Property Markets," Land Economics, University of Wisconsin Press, vol. 72(2), pages 206-217.
    15. Bayer, Patrick & Keohane, Nathaniel & Timmins, Christopher, 2009. "Migration and hedonic valuation: The case of air quality," Journal of Environmental Economics and Management, Elsevier, vol. 58(1), pages 1-14, July.
    16. Joshua D. Angrist & Jörn-Steffen Pischke, 2009. "Mostly Harmless Econometrics: An Empiricist's Companion," Economics Books, Princeton University Press, edition 1, number 8769.
    17. Anna Alberini & Winston Harrington & Virginia McConnell, 1995. "Determinants of Participation in Accelerated Vehicle-Retirement Programs," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 93-112, Spring.
    18. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    19. Marianne Bertrand & Esther Duflo & Sendhil Mullainathan, 2004. "How Much Should We Trust Differences-In-Differences Estimates?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 119(1), pages 249-275.
    20. Ryan Sandler, 2012. "Clunkers or Junkers? Adverse Selection in a Vehicle Retirement Program," American Economic Journal: Economic Policy, American Economic Association, vol. 4(4), pages 253-281, November.
    21. Alberini, Anna & Harrington, Winston & McConnell, Virginia, 1996. "Estimating an Emissions Supply Function from Accelerated Vehicle Retirement Programs," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 251-265, May.
    22. Antonio Bento & Matthew Freedman & Corey Lang, 2015. "Who Benefits from Environmental Regulation? Evidence from the Clean Air Act Amendments," The Review of Economics and Statistics, MIT Press, vol. 97(3), pages 610-622, July.
    23. Abadie, Alberto & Diamond, Alexis & Hainmueller, Jens, 2010. "Synthetic Control Methods for Comparative Case Studies: Estimating the Effect of California’s Tobacco Control Program," Journal of the American Statistical Association, American Statistical Association, vol. 105(490), pages 493-505.
    24. Antweiler, Werner & Gulati, Sumeet, 2015. "Scrapping for clean air: Emissions savings from the BC SCRAP-IT program," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 198-214.
    25. Smith, V Kerry & Huang, Ju-Chin, 1995. "Can Markets Value Air Quality? A Meta-analysis of Hedonic Property Value Models," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 209-227, February.
    26. H. Spencer Banzhaf & Randall P. Walsh, 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout," American Economic Review, American Economic Association, vol. 98(3), pages 843-863, June.
    27. John A. List & Michael K. Price (ed.), 2013. "Handbook on Experimental Economics and the Environment," Books, Edward Elgar Publishing, number 12964.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Edoh Y. Amiran & Joni S. James Charles, 2021. "Reconciling revealed and stated measures for willingness to pay in recreation by building a probability model," Papers 2107.14343, arXiv.org.
    2. Shuhei Nishitateno & Paul J. Burke & Toshi H. Arimura, 2024. "Road traffic flow and air pollution concentrations: evidence from Japan," International Journal of Economic Policy Studies, Springer, vol. 18(2), pages 357-385, August.
    3. Kang, Cheolmin & Ota, Mitsuru & Ushijima, Koichi, 2024. "Benefits of diesel emission regulations: Evidence from the World's largest low emission zone," Journal of Environmental Economics and Management, Elsevier, vol. 125(C).
    4. Shuhei Nishitateno & Paul J. Burke, 2024. "Effects of Low Emission Zones on Air Quality, New Vehicle Registrations, and Birthweights: Evidence from Japan," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(7), pages 1955-1992, July.
    5. Chao Zhang & Mimi Xiong & Xuehui Wei & Zongmin Lan, 2023. "Spatial heterogeneity of marginal willingness to pay for air quality in PM2.5: analysis of buyers’ housing price in Beijing through hedonic price, spatial regression, and quantile regression models," Asia-Pacific Journal of Regional Science, Springer, vol. 7(3), pages 697-720, September.
    6. Changyi Liang & Jing Zhao & Weibiao Ma, 2024. "Urban Spatial Development Mode and Haze Pollution in China: From the Perspective of Polycentricity," Sustainability, MDPI, vol. 16(18), pages 1-17, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shihe Fu & V. Brian Viard, 2022. "A mayors perspective on tackling air pollution," Chapters, in: Charles K.Y. Leung (ed.), Handbook of Real Estate and Macroeconomics, chapter 16, pages 413-437, Edward Elgar Publishing.
    2. Lang, Corey, 2015. "The dynamics of house price responsiveness and locational sorting: Evidence from air quality changes," Regional Science and Urban Economics, Elsevier, vol. 52(C), pages 71-82.
    3. Lindgren, Samuel, 2018. "Traffic Noise and Housing Values: Evidence from an Airport Concession Renewal," Working papers in Transport Economics 2018:15, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 26 Feb 2019.
    4. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2010. "The New Economics of Equilibrium Sorting and its Transformational Role for Policy Evaluation," NBER Working Papers 16349, National Bureau of Economic Research, Inc.
    5. Christian Almer & Stefan Boes & Stephan Nuesch, 2013. "How do Housing Prices Adjust After an Environmental Shock? Evidence from a State-Mandated Change in Aircraft Noise Exposure," Department of Economics Working Papers 11/12, University of Bath, Department of Economics.
    6. Dakshina G. Silva & Anita R. Schiller & Aurélie Slechten & Leonard Wolk, 2024. "Tiebout Sorting and Toxic Releases," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 87(9), pages 2487-2520, September.
    7. Bongkyun Kim, 2019. "Do Air Quality Alerts Affect Household Migration?," Southern Economic Journal, John Wiley & Sons, vol. 85(3), pages 766-795, January.
    8. Guignet, Dennis & Jenkins, Robin R. & Belke, James & Mason, Henry, 2023. "The property value impacts of industrial chemical accidents," Journal of Environmental Economics and Management, Elsevier, vol. 120(C).
    9. Nicolai V. Kuminoff & Jaren C. Pope, 2014. "Do “Capitalization Effects” For Public Goods Reveal The Public'S Willingness To Pay?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 1227-1250, November.
    10. Lüth, Hendrik, 2021. "Reassessing Car Scrappage Schemes in Selected OECD Countries: A Synthetic Control Method Application," Working Paper 190/2021, Helmut Schmidt University, Hamburg.
    11. Christian Almer & Stefan Boes & Stephan Nüesch, 2017. "Adjustments in the housing market after an environmental shock: evidence from a large-scale change in aircraft noise exposure," Oxford Economic Papers, Oxford University Press, vol. 69(4), pages 918-938.
    12. Ahlfeldt, Gabriel M. & Nitsch, Volker & Wendland, Nicolai, 2019. "Ease vs. noise: Long-run changes in the value of transport (dis)amenities," Journal of Environmental Economics and Management, Elsevier, vol. 98(C).
    13. Kathrine Graevenitz & Daniel Römer & Alexander Rohlf, 2018. "The Effect of Emission Information on Housing Prices: Quasi-Experimental Evidence from the European Pollutant Release and Transfer Register," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 23-74, January.
    14. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 405-465, Elsevier.
    15. 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).
    16. Klößner, Stefan & Pfeifer, Gregor, 2015. "Synthesizing Cash for Clunkers: Stabilizing the Car Market, Hurting the Environment," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113207, Verein für Socialpolitik / German Economic Association.
    17. Aarland, Kristin & Osland, Liv & Gjestland, Arnstein, 2017. "Do area-based intervention programs affect house prices? A quasi-experimental approach," Journal of Housing Economics, Elsevier, vol. 37(C), pages 67-83.
    18. Dede Long & David Lewis & Christian Langpap, 2021. "Negative Traffic Externalities and Infant Health: The Role of Income Heterogeneity and Residential Sorting," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 80(3), pages 637-674, November.
    19. Baum-Snow, Nathaniel & Ferreira, Fernando, 2015. "Causal Inference in Urban and Regional Economics," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 3-68, Elsevier.
    20. Boes, Stefan & Nüesch, Stephan, 2011. "Quasi-experimental evidence on the effect of aircraft noise on apartment rents," Journal of Urban Economics, Elsevier, vol. 69(2), pages 196-204, March.

    More about this item

    JEL classification:

    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R48 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Government Pricing and Policy

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:een:ccepwp:2101. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCEP (email available below). General contact details of provider: https://edirc.repec.org/data/asanuau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.