Workshop on the regulation of airport noise - December 10, 2007 - ULB - Brussels

1. Social Cost of Aircraft Noise and Public Debates on Noise RegulationThe need to well understand noise effects on households' attitudes and behaviours Workshop on the regulation of airport noise - December 10, 2007 - ULB - Brussels Guillaume Faburel Department of Urban Studies and Planning – University Paris XII Center of Research on Planning: Land use, Transport, Environment and Local Governments Site: www.univ-paris12.fr/creteil/ Email: faburel@univ-paris12.fr

2. Introduction • Recommendations to internalization (EC, OECD, WHO, Economics literature…) • Potential of internalization is well known : to encourage and to enforce measures • However, there are few real applications of internalization in the aircraft noise field: polluter-pay principal is not really in force (noise levy charges are not based on noise effects) • Why? Numerous reasons, and in particular: • Political risk (ex: social acceptability) • Economical risk (ex: competing distortions in air regulation) • Still uncertainties in valuation • Based on assessments near French airports, the main goal is here to show that under certain conditions social cost valuation could nevertheless help to perhaps calm disputes (on aircraft noise regulation), debates which are focusing more and more social utility of sciences and expertise => Why and How ?

3. Outline • What is social cost and methods to deal with: • One concept: Willingness to Pay (WTP) • Types: revealed or stated preferences methods • Advantages and limits • Some operational results from methods applied to aircraft noise • Contingent Valuation Method (CVM) and Hedonic Price Method (HPM) applied near Orly Airport: • Mean WTP, depreciations due to noise and determinants • The prime role of territorial determinants of WTP • Discussion: necessity to better understand effects, first of all annoyance, in behaviour and attitudes to deal with social cost as territorial data, and perhaps to better feed public debates on noise regulation, with a PPP perspective

4. 1. Valuation of social cost: concept and methods • Environment as non-marketable value, costs curve and WTP => put monetary value on hidden costs and effects • Steps and principals of monetization • Revealed Preferences Methods: • Reveal WTP thanks to the observation of expenditures on real markets • Methods: Cost of Protection, Hedonic Price Method… • Advantages: real behaviours and practices • Limits: What does the WTP clearly measure? • Scientific and operational issues • the necessity to complement by a survey ? • Nevertheless: 1st step of HPM frequently used to assess NDI (see table next slide)

6. Valuation of social cost: concept and methods • Stated Preferences Methods: • Main method: Contingent Valuation Method • Cornerstone: scenario presenting a noise mitigation program (sets, stakeholders, cost, duration, directs and sides effects…) • WTP request at the end of the scenario presentation • Limits: hypothetical context, acceptability… => reliability • But: existing techniques to try to overcome bias • And one important asset: assess the whole WTP determinants • Obtain information on individual and social characteristics (income, household size, noise perception, political attitudes and beliefs about the aircraft noise issue…) • Scientific issue (WTP determinants)

8. 2. CVM applied near Orly Airport • Adaptations required: • Cross-sectional, cross-disciplinary approach (economics, acoustic, psychology and sociology) and cross-methodologies (in depth interviews, questionnaires in door-to-door, and deliberative processes – focus groups) • Number of questions in questionnaires: more than 80 for a length each about 50 minutes • Number of questionnaires: 607 (representative sample of 70,000 people in the vicinity of Orly Airport) • Found supports for CVM: ADEME (French Environmental Agency) • The Orly Airport situation and urban setting: • PAX: 22 millions in 2006 (2d in France and 9th in Europe) • Movements: 243,500 (caped since 1994) • Urban setting: the oldest major airport in France

9. 2. CVM applied near Orly Airport • Willingness To Pay rate and mean amount • 51 % of the sample declared a positive WTP (double bounded technique following open-ended question) for an annoyance ban thanks to a reorganization of all flight tracks (scenario shaped through previous 16 in-dept interviews). This rate is quite consistent with results from previous researches • The mean WTP is about 7 Euros (1999)/HH/month, ranged between 1,47 to 16,39 (infra) according to the mean level of annoyance declared for each city surveyed (see graph below) • It corresponds to 0.4 % of the mean income (consistent with previous studies like Vainio 1995 or Navrud 2002) • Reasons declared to refuse the WTP: • Not to be annoyed • The polluter should pay • Fear of permanent tax

10. 2. CVM applied near Orly Airport • WTP determinants: see Table next slide

11. 2. CVM applied near Orly Airport

12. 2. CVM applied near Orly Airport • Main results for our purpose: • The annoyance is one of the most important WTP determinant • evidence of rationality, so of the role of perception • confirmation of the annoyance indicator validity for econometrics models (not verbal but numeric scale, see Fidell, Miedema, Job and Guski works for instance) • Other variables are consistent with previous results (dwelling type, income…); the low school diploma variable hides elderly persons, and the accommodation (house with garden) the type of property • A last run of statistical processing (factor analysis), shows that some people also declare a positive WTP to protect their feeling of belonging to a local and political community • cross disciplinary and cross methodology approach could be effective

13. 2. CVM applied near Orly Airport

14. 2. CVM applied near Orly Airport • One confirmation of the amounts reliability: • Corresponds to the loss of land tax estimated by main mayor • to envisage individual and collective compensation • The average cost of the mean annoyed person in the most exposed area: almost 100 Euros per year (1999) • The cost of highly annoyed person: 197 Euros / year (1999), even if accommodation sound-proofed • Equal to 30 % of measures amount currently in force

16. 2. CVM applied near Orly Airport • At this stage, the annoyance function indicates three main types of explanatory factors, with an equal statistical weight: • Acoustical characteristics of aircraft noise • Housing, economical activity and social level: urban setting history, use of accommodation, households residential trajectories, to be employed on the platform, educational level… • Political beliefs, perceptions and involvement: annoyance mitigation expectations, to feel close to the association or community involvement in the debate, beliefs of multitude of effects (ex: property values depreciation)… • The influence of the two last types of factors can be easily observed: • For instance, in addition to type of accommodation or occupation status: “date of households move in” (see also Staples, 1999), “to have planed to move out” or “time spent in house during periods of the week” => the annoyance depends on ways and quality of life

17. 2. CVM applied near Orly Airport • The CVM method allows to measure at the same time the effect we seek to monetize (the annoyance) • The need of a cross-disciplinary and cross methodology approach • To envisage the preventive internalization thanks to the use of valuation techniques for project: CBA, CE, Multicriteria analysis, EIS... • The need also to a scientific validation with other methods, as recommend by Navrud (2002) and HEATCO (2005) => HPM

18. 3. HPM applied near Orly Airport • Econometric analysis of property values depreciation caused by “aircraft noise” • Hedonic Price Method applied for French Environmental Agency (2004) • Whole sample: 10,743 accommodations sailed between 1995 and 2003; limited sample: 688 values “only exposed to aircraft noise”; located in one of main 8 cities exposed, mean value of accommodation: 95,000 Euros • Main results: see table next slide. First, the prices model is statically robust and economically consistent, and at least three cities are concerned by these type of depreciation – the most exposed to aircraft noise

20. 3. HPM applied near Orly Airport • The Noise Depreciation Index(NDI) = 10(- 0,0042) – 1 = - 0,0096 = 0.96 % for each dB(A) more than 65 (quite conform to the plentiful research results on this topic, see Nelson 2004) • This depreciation corresponds to a maximum value about 8-10 % of the accommodation price, i.e about 10 000 Euros per accommodation, all else equal • Especially, this NDI has increased during the period whilethe noise exposure was remaining stable (cap slots since 1994): from 0.86 % to 1.48 % • Namely, a mean value lost about 4 000 and 5 000 Euros for an accommodation bought between 1995 and 2000, and sailed after, in one of the three cities concerned

21. 3. HPM applied near Orly Airport Source: Centre for Research on Planning: Land use, Transport, Environment, Local Governments

22. 3. HPM applied near Orly Airport • During the same period, among those sellers and buyers, the high income and older households have left from those three cities, while less wealthy and younger ones move in, in comparison with the five other cities • So, the airport area remains attractive, but the population turn over is not equal: poor and young households who can so become faster owners substitute for wealthier households • Social segregation in process, as shown in USA nearby some not environmental friendly industries, incinerators… even airport (see LAX) • There is no “natural” individual compensation for aircraft noise externality because, as shown by Button (2003), those new households will sell loosing more money, since the NDI increasing although the noise exposure remains steady => Is it fair according to the environmental justice principle?

23. 3. HPM applied near Orly Airport • Especially, the noise nuisances anticipation, and the annoyance felt by population already living in exposed area play a more important role than what acoustics can explain => The social sensitivity and annoyance due to aircraft noise have certainly now more influence on NDI that increased, than exposure • HPM results confirmed by the amount of WTP/Pers/Year deducted to house market value (K = R/TI) : 209 Euros in comparison to 197 Euros (WTP/HAP/Year) for the same city location (with 4% of TI), by CVM on social cost of annoyance

24. 4. Discussion • Official reports UNITE (UNIfication of accounts and marginal costs for Transport Efficiency, 2003) and workshop HEATCO (Harmonised European Approaches for Transport Costing, 2005), both for EU, insist on: • The necessity to combine Impact Pathway Approach with social cost evaluation from national accounts data, andespecially marginal costs measures in context, in order tocompare cost and damages at the relevant scale • And, “It is the use of case study and accounts data together which is likely to be the most practical means of generating practical marginal cost estimates which feed into pricing policy” (UNITE,2003, Executive Summary, p. 8)

25. 4. Discussion • It allows to feed differently and efficiently the decision making processes, not just doing technical action at the large scale (noise levy charges, soundproofing programs…), but also with urban planning (other rules of land use), housing market, residential dynamics considerations, so with other principles for public policies to face disputes, in context • “In practice, pricing policy may involve balancing a mixture of considerations. Efficiency is clearly one, but notions of equity, fairness, cost recovery and revenue raising are others” (UNITE, 2003)

26. 4. Discussion • However, in practice, this trend first depends on the importance afforded by authorities to damages, especially annoyance, so its understanding both in attitudes declared (CVM) and behaviours revealed (HPM) • Also relevant is to build territorial indicators, for instance monetary ones, in supplement of noise standards and indices, in a sustainable development perspective (work for Eurocontrol, 2006) • Those goals are, on this base of data and on others, currently in construction with communities and local governments, near Orly Airport, and in some others places (for instance, Vienna International Airport for sustainable indicators ; or recent survey on annoyance, property values depreciation… near Frankfurt Rhin-Main; even near Los Angeles International Airport). Thank you