Are Land Values Related to Ambiet Air Pollution Levels? Hedonic Evidence from Mexico City

Lopamudra Chakraborti, David Ricardo Heres () and Dane Hernández Cortés ()
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David Ricardo Heres: Division of Economics, CIDE
Dane Hernández Cortés: Division of Economics, CIDE

No DTE 596, Working Papers from CIDE, División de Economía

Abstract: The averange resident of Mexico City suffers unhealthy levels of air quality for the most part of the year. Nevertheless, the uneven distribution of firms and road traffic across the city, together with wind patterns and differences in microclimates generates localized pollution concentrations. The objective of this study is to investigate wheter residents of Mexico City value cleaner air taking advantage of the variation in pollution levels and land values observed across neighborhoods within the city. Contrary to most studies of this type, commonly focused in developed countries, ours is based on land values reported by external appraisals. The panel nature of our data and inclusion of time varying controls for neighborhood characteristics and local economic conditions allows for correction of potential endogeneity bias arising due to unobserved factors that influence both current pollution levels and property values. Our results suggets that air quality improvements lead to an increase in land values by approximately 3% in Mexico City which is equivalent to a marginal willingsess to pay of up to %178 (2010) pesos per m^2. Thus, we provide an estimate of the possible benefits of public policy dedicated to air quality improvements, measured as the value that Mexico City's residents have for cleaner air.

Keywords: Air Quality; Hedonic Valuation; Willingness to Pay; Environmental amenities; Mexico City (search for similar items in EconPapers)
JEL-codes: Q51 Q53 R14 R21 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2016-02
New Economics Papers: this item is included in nep-agr, nep-ene, nep-env and nep-ure
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http://www.economiamexicana.cide.edu/RePEc/emc/pdf/DTE/DTE596.pdf (application/pdf)

Related works:
Journal Article: Are land values related to ambient air pollution levels? Hedonic evidence from Mexico City (2019)
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