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Title: A Discrete Choice Equilibrium Approach to Valuing Large Environmental Changes

Author

Listed:
  • Constant Tra

    (Department of Economics, University of Nevada, Las Vegas)

Abstract

This study develops a discrete choice locational equilibrium model to evaluate the benefits of the air quality improvements that occurred in the Los Angeles area following the 1990 Clean Air Act Amendments (CAAA). The discrete choice equilibrium approach accounts for the fact that air quality improvements brought about by the 1990 CAAA will change housing choices and prices. The study also provides new evidence for the distributional welfare impacts of the 1990 CAAA in the Los Angeles area. Findings suggest that the air quality improvements that occurred in the Los Angeles area between 1990 and 2000 provided substantial general equilibrium benefits to households. The analysis reveals noticeable differences between partial and general equilibrium welfare gains, demonstrating that ignoring equilibrium effects will likely misrepresent the benefits of large environmental changes. In addition, we find that the equilibrium welfare impacts of the 1990 CAAA in the Los Angeles area varied significantly across income groups.

Suggested Citation

  • Constant Tra, 2009. "Title: A Discrete Choice Equilibrium Approach to Valuing Large Environmental Changes," Working Papers 0922, University of Nevada, Las Vegas , Department of Economics.
    • Handle: RePEc:nlv:wpaper:0922
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    File URL: http://web.unlv.edu/projects/RePEc/pdf/0922.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    benefit analysis; ozone improvement; locational equilibrium; discrete choice;
    All these keywords.

    JEL classification:

    • H0 - Public Economics - - General
    • Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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