The Impact of Spatial Patterns in Road Traffic Externalities on Willingness-to-Pay Estimates

Studying traffic related externalities in the city of Gent (Belgium), we find little to no evidence that observed spatial dependencies in actual (objective) externality levels play a direct role in determining spatial dependencies in the willingness to pay (WTP) for changes in the city's mobility policy. Investigating alternative factors that can influence WTP-estimates, however, reveals that higher stated (subjective) externality levels are positively correlated with higher WTP for reducing exposure to noise, air and odor pollution. Our results suggest complex interactions between housing decisions, perceived externality levels and WTP-estimates. Thus, allowing for subjective perceptions, sorting behavior and patterns in individuals' characteristics can result in WTP-estimates that are not spatially correlated even though the underlying externalities are spatially correlated.