Conference Agenda

The expansion, opening or closure of an international airport is an ‘ideal’, but very rare, external shock for monetising aviation noise. There are a hand-full of quasi-experimental studies on the context and only one that estimates a marginal (per decibel) value of noise increase from runway expansion. We employ a quasi-natural experiment of a major international airport closure in Greece as the noise removal treatment. We propose an extension of the difference-in-differences hedonic pricing to include a ‘differenced Comparable Sales’ approach inspired by a type of first-difference transformation widely employed in real estate industry. This approach treats omitted variable bias without requiring any small-area fixed-effects, which is especially useful in cases of sparse and challenging data. We contribute to the literature by estimating for the first time a marginal willingness to pay of 0.74% price increase per decibel of noise reduction from an airport closure quasi-natural experiment. The airport closure results on average to a 5.4% price increase, which provides a tentative estimate of over 1 billion €s potential benefits because of the aviation noise termination capitalised in the local housing stock. We also find that noise reductions are not valued linearly above 65 decibels.