Noise externalities: A hybrid model to assess effects and management with application to transportation issues in Rhode Island

Suk-Jae Kwon, University of Rhode Island


This study estimates the potential external costs from heavy-duty truck traffic noise in the context of a proposed container port development. The study also explores economic valuation methods including theoretical concepts and a comparison of hedonic model specifications for estimating losses. ^ The results of a hedonic property model for TF Green Airport, show that noise has a statistically significant and quantitatively important negative effect on property values. The key results for the best model show that damages (in year 2000 dollars) are -$5000 * (ln dB) allowing for the influence of other factors. Because ln(dB) is a strictly concave function, the "noise damage function" exhibits diminishing marginal effects with noise. ^ Aggregate estimated property damages to single family homes exposed to incremental port traffic noise along the main port connector road ranges from $34,873 to $38,590 (in year 2000 dollars), depending upon the discount rate (5.875% or 3%) used. The results of sensitivity analyses show that using the 5.875% discount rate, across cases damages range from a low of $20,666 for a Base Case with a 25 mph speed enforced for trucks, to a high of $106,404--$95,823 (depending upon the discount rate used) for the "worst case". ^ The costs of a noise dampening barrier are considerably larger than the benefits gained from damage avoided in all cases considered. A stronger case for installing noise barriers can be made if all residential development, not just single family homes, is considered. Several apartment complexes exist along the connector road. Taking estimated noise damages to multi-unit residential structures into account $20,069 to $34,873, the overall costs of $1,062,123 for the 3 meter barrier and $54,962 (with 5.875% discount rate) are closer to the benefits which would be realized by reducing noise to all residential units. Further, although costs exceed benefits for incremental noise because of the hypothetical port, the case for a barrier is stronger when all sources of noise, and not just incremental noise from a new port, are considered. ^

Subject Area

Economics, General|Transportation|Urban and Regional Planning

Recommended Citation

Suk-Jae Kwon, "Noise externalities: A hybrid model to assess effects and management with application to transportation issues in Rhode Island" (2006). Dissertations and Master's Theses (Campus Access). Paper AAI3225318.