Measuring the noise cost of aviation – The association between the Limited Use Area around Warsaw Chopin Airport and property values

Abstract

The interactions between air transport activities, airport location, local society and the regional economy are of great importance in policy decisions. Air traffic growth enhances the development of the economy and brings benefits to users. On the other hand, negative externalities are borne to great extent by the local community. Sustainable development policy requires all the effects caused by the provision of air services to be included in a comprehensive assessment of air transport activities. The objectives of this study were to discuss the role of air transport development policy as an instrument for sustainable development, investigate the external costs of aviation with particular emphasis on the effect of Limited Use Area (LUA) related to aviation noise on the local community, and estimate to what degree this impact stabilizes over a period of time. The social cost of noise was evaluated through a complementary market, namely a change in the value of properties located in an area affected by airport activities. Hedonic price modelling was applied to evaluate the association between the LUA being established on the basis of the actual and predicted noise related to the operation of the Warsaw Chopin Airport, the largest airport in Poland, and housing prices in Warsaw. The estimates suggested that the impact of aviation noise on land use policy had implications for the housing market. The results of the study showed that aviation noise was negatively associated with the price value of apartments in multifamily buildings. However, the degree of this association changed over time. After policy intervention and the official implementation of the actual LUA around Warsaw Airport in 2011, the decrease in the price value of dwellings located within the LUA was stronger.