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Title: A Discrete Choice Equilibrium Approach to Valuing Large Environmental Changes

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Author Info
Constant Tra () (Department of Economics, University of Nevada, Las Vegas)

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Abstract

This study develops a discrete choice locational equilibrium model to evaluate the benefits of the air quality improvements that occurred in the Los Angeles area following the 1990 Clean Air Act Amendments (CAAA). The discrete choice equilibrium approach accounts for the fact that air quality improvements brought about by the 1990 CAAA will change housing choices and prices. The study also provides new evidence for the distributional welfare impacts of the 1990 CAAA in the Los Angeles area. Findings suggest that the air quality improvements that occurred in the Los Angeles area between 1990 and 2000 provided substantial general equilibrium benefits to households. The analysis reveals noticeable differences between partial and general equilibrium welfare gains, demonstrating that ignoring equilibrium effects will likely misrepresent the benefits of large environmental changes. In addition, we find that the equilibrium welfare impacts of the 1990 CAAA in the Los Angeles area varied significantly across income groups.

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File URL: http://www.unlv.edu/projects/RePEc/pdf/0922.pdf
File Format: application/pdf
File Function: First version, 2008
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Publisher Info
Paper provided by University of Nevada, Las Vegas , Department of Economics in its series Working Papers with number 0922.

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Length: 48 pages
Date of creation: Apr 2009
Date of revision:
Handle: RePEc:nlv:wpaper:0922

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Related research
Keywords: benefit analysis; ozone improvement; locational equilibrium; discrete choice;

Find related papers by JEL classification:
H0 - Public Economics - - General
Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
R21 - Urban, Rural, and Regional Economics - - Household Analysis - - - Housing Demand

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. James M. Poterba, 1992. "Taxation and Housing: Old Questions, New Answers," NBER Working Papers 3963, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  2. Maria Marta Ferreyra, 2009. "An Empirical Framework for Large-Scale Policy Analysis, with an Application to School Finance Reform in Michigan," American Economic Journal: Economic Policy, American Economic Association, vol. 1(1), pages 147-80, February. [Downloadable!]
  3. Smith, V Kerry & Huang, Ju-Chin, 1995. "Can Markets Value Air Quality? A Meta-analysis of Hedonic Property Value Models," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 209-27, February. [Downloadable!] (restricted)
  4. Quigley, John M., 1985. "Consumer choice of dwelling, neighborhood and public services," Regional Science and Urban Economics, Elsevier, vol. 15(1), pages 41-63, February. [Downloadable!] (restricted)
  5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb.. [Downloadable!] (restricted)
  6. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," NBER Working Papers 13236, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
    Other versions:
  7. Palmquist, Raymond B., 1988. "Welfare measurement for environmental improvements using the hedonic model: The case of nonparametric marginal prices," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 297-312, September. [Downloadable!] (restricted)
  8. Holger Sieg & V. Kerry Smith & H. Spencer Banzhaf & Randy Walsh, 2004. "Estimating The General Equilibrium Benefits Of Large Changes In Spatially Delineated Public Goods," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 45(4), pages 1047-1077, November. [Downloadable!] (restricted)
    Other versions:
  9. Kuminoff, Nicolai V., 2008. "Recovering Preferences from a Dual-Market Locational Equilibrium," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 5989, Australian Agricultural and Resource Economics Society. [Downloadable!]
  10. Walsh, Randy, 2007. "Endogenous open space amenities in a locational equilibrium," Journal of Urban Economics, Elsevier, vol. 61(2), pages 319-344, March. [Downloadable!] (restricted)
  11. Berry, Steven & Levinsohn, James & Pakes, Ariel, 1995. "Automobile Prices in Market Equilibrium," Econometrica, Econometric Society, vol. 63(4), pages 841-90, July. [Downloadable!] (restricted)
  12. Anas, Alex, 1980. "A probabilistic approach to the structure of rental housing markets," Journal of Urban Economics, Elsevier, vol. 7(2), pages 225-247, March. [Downloadable!] (restricted)
  13. Dennis Epple & Holger Sieg, 1999. "Estimating Equilibrium Models of Local Jurisdictions," Journal of Political Economy, University of Chicago Press, vol. 107(4), pages 645-681, August. [Downloadable!] (restricted)
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