The Benefits and Costs of Noise Reduction

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The Benefits and Costs of Noise Reduction
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Introduction to Study

• Paper attempts to measure, using CBA, a stricter
  noise abatement program for noise originating
  from roads in Israel.

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Two Proposals

• The study uses CBA with respect to two proposed
  noise standards
• 64 decibels
• 59 decibels
• Current noise standard 67 decibels

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Four Techniques to Measure Benefit

• Cost of abatement
• Assume that cost of the abatement is a minimal
  estimate of the noise damage.
• If person is willing to pay 100 for the
  insulation process, then the benefit must be at
  least 100.
• Cost of illness
• Uses the health expenditures as a proxy market
  for noise damage.
• Contingent Valuation Method (CVM)
• Based on stated preferences of a representative
  sample of the public, who are affected by the new
  noise standards.

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Four Techniques to Measure Benefit

• Hedonic Price Method (HPM)
• Real estate market is used as a proxy for the WTP
  for a less noisy apartment.
• Most popular approach to estimating the true
  value of noise reduction.

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HPM

• Assuming that a vector of attributes determines
  the price of a product
• Vv(N,Z)
• VReal Estate Value
• NNoise Level
• Zall other characteristics that affect real
  estate

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WTP in the HPM

• Vv(N,Z)
• Coefficient of N represents the value of one unit
  of noise in decibels
• ? How much people are WTP, in terms of
  property value, to eliminate N.
• WTP (dv/dN) NV (noise value)

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HPM assumptions

• There is a full equilibrium in the housing market
  and in the market for individual attributes.
• Very little or no information bias between
  sellers and buyers.
• Very little or no governmental intervention in
  the mortgage market.

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Regression Calculation

• 280 observations
• LN(price) Variables Coefficients
• Noise Variables
• Impact of a 1 decibel change on the percentage
  change of the value of the given property

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The Benefit of Noise Reduction in Urban Areas
The Density Effect

• In order to do the next step in CBA, one needs to
  look at the total value of a given noise
  reduction
• The relevant factor for noise is apartment
  density(split between rural and urban areas)
• The density in urban areas depends upon the
  height of the building

The Benefit of a given urban area is
PVC.0012(Dec.0-Dec.1)Ci(NF-1) Where PVC
Property Value Change Dec.0 old noise standard
in decibels Dec.1 new noise standard in
decibels Ci Change in the initial property
value(Floors) NF Number of floors
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The Benefit of Noise Reduction Continued
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The Benefit of Noise Reduction in Rural Areas

• The density in the rural-suburban areas is 1 unit
  for every 20 meters so the equation we use is
• PVC(1/20)Vx.022(Dec.0-Dec.1)
• VInitial property Value

• With rural houses, there is a different benefit
  for each change in the property price
• The table below shows the benefit of these
  changes per price level

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The Benefit of Noise Reduction in Rural Areas
Continued
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Analyzing the Acoustic Costs

• The next step in analyzing these benefits are to
  look at the additional costs of reaching the new
  noise standard relative to the old standard
• Analysis was made for the 67-64 and 67-59
  decibel

• The different techniques to lower noise in an
  area are
• Road restructuring and roofing, Noise barriers,
  or Apartment treatment

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The Costs of moving to different decibel levels
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The Net Benefit of a Transition to the different
decibel levels in Urban areas
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The Net Benefit
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Analysis of the benefits

• In this analysis, there is no clear cut result.
• There are many variables affecting the cost
  benefit analysis the road pattern, amount of
  floors, distance from road, the density of the
  housing etc.

• General facts are that
• The higher the building, the higher the barriers
  that are needed to protect it
• The greater the distance between the road and the
  building means the lower acoustic barriers needed
  to protect that building(but as the affect of the
  barrier declines, as does the benefit)
• The higher the price of a building, the greater
  the benefit to reduce the noise

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General Summary

• When analyzing the benefits of noise reduction in
  an area, the best way to approach this problem is
  to look at each area on a case by case basis(
  urban and rural areas, prices of buildings, etc)
• This research was used in order to perform a
  National noise standard, but this standard would
  not be optimal.