The social cost of noise

The social costs of noise have been evaluated on a number of occasions and there is a plethora of studies attempting quantification of impacts (with many of them related to the assessment of benefits from noise mitigation). Most of the studies to date, however, have focused on the decline of house prices and on health impacts, in particular annoyance (although in some cases annoyance is assessed separately and/or under quality of life aspects). Other impacts that are still being investigated include environmental impacts on biodiversity, mainly changing mating patterns (e.g. bats affected by noise). There are few studies addressing distributional impacts from noise pollution alone, although this is normally part of the appraisal of transport strategies.

The costs of noise have been valued in a number of ways (Definitions based on WG on Health and Socio-economic aspects’ Position Paper, (2003)) :

• Willingness to pay, based on surveys (stated preference) or contingent valuation: under this group of methods, people are asked to state how much they are willing to pay (WTP) to reduce their noise exposure by a given amount (or willing to forego in terms of other goods and services). The payment vehicle might be an increase in specific charges (e.g. rent), local taxes, compensation payments to local businesses etc. Money values are generated which represent changes in noise levels;

• Hedonic pricing (HP) to assess the change of the market value of properties: this is based on the effect of noise levels on property prices, in particular on the price for housing (Take two otherwise identical properties that differ only in the amount of noise. Since people experience the adverse effects of excessive noise, the noisy house/apartment will attract a lower rental payment or lower sale price than the quiet one. The difference revealed in such transactions between the prices of the noisy and quiet place can be used, after controlling for other effects, to calculate per decibel value of noise.). As people are willing to pay for quiet, they trade money for noise 'indirectly' through the housing market (rental and sales). This is also a method to reveal WTP but does not require a survey, instead falling into the group of “revealed preference” methods; and

• Cost of medical care and production losses: this is mainly aimed at assessing health impacts from noise pollution. As noise is reported to affect health, this may have implications in terms of medical costs as well as productivity losses from sick leave.

Ways of measuring the economic costs of noise damage vary from country to country. A recent estimate is that the social costs of traffic, rail and road noise across the EU are €40 billion a year, of which 90% is related to cars and lorries. This is about 0.4% of total EU GDP  (CE Delft, 2007) and also includes health care costs (It should be noted that this takes into account only effects related to noise levels above 55 dB(A)). The Commission’s Green Paper “Fair and Efficient Pricing in Transport” used a lower estimate, of 0.2% of GDP, which represents an annual cost to society of over €12 billion.

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