Paying for Quietness. The Impact of Noise on Geneva Rents

Abstract:     
Using the hedonic approach, this paper analyses housing market data to infer the impact of noise on rents in Geneva, Switzerland. Using three different databases, including a geographical information system (GIS), we obtained structural, accessibility and environmental variables for a large proportion of apartments rented in Geneva. The results can be summarised as follows. First, we show that the impact of all sources of noise on rents at the level of the whole Canton is about 0.7% per dB(A) and about 1% when considering exclusively airplane noise, in the airport area. Second, this impact does not change fundamentally depending on the different measures of noise we used in the estimations. Third, the impact of noise does not depend on the institutional structure of the market, i.e. it is relatively similar in the private rental sector and in apartments directly under Government control, although in the former the dynamic of noise has a greater impact. Fourth, our results show that noise has also a higher economic impact, when the background noise level is lower. And fifth, air pollution has a distinct impact on rents, in addition to noise.

Keywords: Noise, housing market, hedonic model, hedonic approach, external cost, monetary valuation, geographical information system (GIS)

JEL Classification: Q5, Q51, D61, R31

Accepted Paper Series