Economics Working Papers

Document Type

Working Paper

Publication Date



This paper develops estimates of environmental improvement based on a two-stage hedonic price analysis of the single family housing market in the Puget Sound region of Washington State. The analysis — which focuses specifically on several EPA-designated environmental hazards and involves 226,918 transactions for 177,303 unique properties that took place between January 2001 and September 2009 — involves four steps: (i) ten hedonic price functions are estimated year-by-year, one for each year of the 2000s; (ii) the hedonic estimates are used to compute the marginal implicit price of distance from air release, superfund, and toxic release sites; (iii) the marginal implicit prices, which vary through time, are used to estimate a series of implicit demand functions describing the relationship between the price of distance and the quantity consumed; and, finally (iv) the demand estimates are compared to those obtained in other research and then used evaluate the potential scale of benefits associated with some basic environmental improvement scenarios. Overall, the analysis provides further evidence that it is possible to develop a structural model of implicit demand within a single housing market and suggests that the benefits of environmental improvement are substantial.


U.S. Department of Housing and Urban Development Working Paper # REP 10-02; May, 2010

This paper was prepared for the meetings of the American Real Estate and Urban Economics Association, June 3-4, in Washington, DC and the meetings of the Spatial Econometric Association, June 10-12 in Chicago, IL. The opinions expressed in this paper are those of the authors and do not necessarily reflect the opinions of the Department of Housing and Urban Development or the U.S. government at large.

Included in

Economics Commons