Traffic noise and property values: an instrumental variable strategy for hedonic valuation

Noise pollution is a consequence of socioeconomic development processes and urbanization. Noise action plans, urban planning, and traffic management are costly, and their undertaking raises the issue of the value of noise reduction to households. We use hedonic pricing to estimate the value of traffic noise for urban residents in Quito, Ecuador. Results were obtained using instrumental variables in order to control the possible omitted variables due to any spatial effect. Considering a large dataset of property attributes and noise exposure, properties inside the mixed land use were compared to those right behind them in a 20-meter buffer, which was characterized by similar structural attributes but different noise exposure levels.