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

Constant Tra ()

No 922, Working Papers from University of Nevada, Las Vegas , Department of Economics

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.

Keywords: benefit analysis; ozone improvement; locational equilibrium; discrete choice (search for similar items in EconPapers)
JEL-codes: H0 Q28 R13 R21 (search for similar items in EconPapers)
Pages: 48 pages
Date: 2009-04
New Economics Papers: this item is included in nep-dcm, nep-env and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:nlv:wpaper:0922

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