Benefit measures for noise abatement : calculations for road and rail traffic noise

Purpose The aim of this study is to estimate monetary abatement values for road and rail traffic noise that can be used for policy purposes. However, a main objective is to critically discuss the assumptions necessary to convert the monetary values elicited in willingness to pay (WTP) studies to values than can be use for policy purposes. Methods We employ the hedonic regression technique on Swedish data to elicit individuals' preferences for noise abatement. Our elicited values are then converted to policy values and critically examined based on findings from a literature review. Results We show that WTP for road and rail not only differs in levels but also that the relationship between the noise level and the marginal value differs between the two sources. We also show that a health cost component added to the WTP estimate, based on the assumption of uninformed property buyers, will be small but not negligible and that also modest differences in the assumption of the discount rates will have a significant effect on the estimated values. Conclusions The main implications from this study are: (i) WTP for road and railway noise abatement differs not only on absolute but also marginal levels, (ii) Even small differences in the chosen discount rate, which is necessary to convert WTP values from a hedonic price study to policy values, have large effects on the policy values, and (iii) We show how to add a health cost component to the WTP estimates in order for the monetary estimates to reflect the total social cost. However, we argue that the motivation for doing so is weak and that more research is needed on this issue