Valuation of traffic-noise abatement

The purpose of this paper is to analyze the economic consequences of an investment in traffic-noise abatement. Two hypotheses are tested: first, a noise barrier has a positive capitalization effect on the values of single-family houses; second, there is a difference in capitalization rate between houses close to and remote from the road. Both hypotheses are verified. The benefits have been estimated by analyzing prices of houses that have been sold more than once; that is the repeated-sales method (RSM). The repeated-sales model has been tested for sample selection bias and the implicit assumption about parameter constancy over time. The total benefit to the stock of houses has been estimated and compared with the total cost. I conclude that in this case, public investment in a traffic-noise barrier can be clearly justified. © Springer 2005.