This study estimates the market value of clean air by examining the impact of air pollution on property prices.
And has two important features that make our investigation feasible: 1) the variety of building forms and street locations resulted in significant variations in air quality across housing units and 2) the housing units are actively traded in the market and their property attributes are relatively homogenous. It also estimates the implicit price of air quality by constructing a hedonic price model that includes the simulated housing unit-specific air pollution level as one of the explanatory variables.
We found that the level of air pollution, as measured by respirable suspended particulates, has a significant negative impact on housing prices. The results also suggest that the willingness to pay for clean air increases with air pollution levels and the value of a housing unit.