Project at a Glance

Title: Air quality benefit analysis for Los Angeles and San Francisco based on housing values and visibility

Principal Investigator / Author(s): Trijonis, John

Contractor: Santa Fe Research Corporation

Contract Number: A2-088-32

Research Program Area: Economic Analysis

Topic Areas: Benefits


Benefits of improved air quality are estimated by examining the public's willingness to pay for visibility as revealed in home sale prices. The investigation is conducted for the 1978-79 period in two study areas, Los Anqeles (four counties) and San Francisco (five counties). The analysis uses an extremely large, finely resolved data set for visibility levels, home sale prices and house / community / location / socioeconomic characteristics. The data are gathered from 39 airport weather stations (visibility), the Market Data Cooperative (home sale prices and house specific characteristics), as well as the Census and other data sources (other characteristics).

The economic analysis follows the hedonic price method. First, home sale price is related statistically to visibility and the house / community / location / socioeconomic characteristics. The results (including the hedonic price for visibility) are statistically significant, have the expected sion, and are stable with respect to various sample sizes, visibility indices, model formulations, and functional forms. Next, the "hedonic price" for visibility is related to visibility levels and income levels in order to determine the economic (inverse) demand curve. This demand curve in turn yields estimates of benefits. It is found that, depending on assumed functional form, a 10% improvement in visibility would produce benefits of 250-617 million dollars per year in Los Angeles and 190-220 million dollars per year in San Francisco.

A demonstration is made of how to apply the results through an illustrative example -- benefits of controlling diesel particle emissions in Los Angeles. It is estimated that the elemental carbon component of diesel particle exhaust contributed 12.00 of Los Anqeles' visibility reduction in 1980, and that diesel emissions will grow by a factor of 2.3 from 1980 to 1992 Linder a "no-control" scenario. It is found that 50% control of diesel elemental carbon emissions would yield benefits of one to five billion dollars over the 1980-1992 period. The benefits are substantially reduced by postponing and phasing-in controls.

For questions regarding this research project, including available data and progress status, contact: Research Division staff at (916) 445-0753

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