Essays in Environmental and Urban Economics

This dissertation investigates the impact of noise pollution on residential properties in the Phoenix metropolitan area. It leverages quasi-random changes in flight paths to and from Phoenix Sky Harbor Airport, focusing on the adoption of the NextGen policy and subsequent flight path reversal upon court intervention. NextGen aimed to reduce flight costs by using computer-algorithm-generated optimized flight paths. In addition to estimating the value of quiet, this dissertation analyzes the distributional welfare impacts of policies that spatially alter noise pollution exposure, residential sorting, and environmental justice. In Chapter 1, the capitalization effect of noise pollution on the housing market is examined. Findings reveal that a mere 1 decibel increase results in a 1% reduction in property values. Furthermore, the chapter examines the distributional impacts of flight path changes across various demographic and socioeconomic characteristics of residents. I find that initially, computer-generated flight paths benefited neighborhoods with a higher proportion of Black residents. However, a court-ordered reversal ultimately left them worse off than before the initial change. Chapter 2 introduces a residential sorting model designed to assess welfare effects and simulate market responses to alternative policies. The estimated average marginal willingness to pay (MWTP) to avoid noise pollution stands at $3,038 per decibel, with variations based on household demographics. Additionally, a Pigouvian tax on airplane passengers to compensate for noise pollution amounts to approximately $16 per one-way flight, notably comparable to the carbon tax for a similar journey. Various counterfactual scenarios regarding noise pollution exposure are explored to inform policy decisions. Chapter 3 addresses two challenges in using property transaction data to estimate the MWTP to residential exposure to noise pollution. First, ignoring information frictions among home buyers may bias estimates of the MWTP for an amenity. Second, changes in the amenity of interest may affect other endogenous amenities, further complicating the identification of MWTP. I address both challenges using a novel instrumental variable based on spatial variation in the salience of noise pollution caused by hourly variation in flight paths due to wind direction. I find the mean MWTP for a one-decibel reduction in noise pollution be $4,742.