The impact of aircraft noise on apartment prices: a differences-in-differences hedonic approach for Frankfurt, Germany

This paper assesses the implicit valuation of aircraft noise by looking at changes in list offer prices for owner-occupied apartments around the airport of Frankfurt, Germany. A differences-in-differences research design permits circumvention of typical endogeneity problems in hedonic price estimations: Namely, the construction of the northwest runway in 2011 led to new aircraft noise exposure and subsequent price decreases in some southern parts of Frankfurt. The paper compares price changes in differentially affected areas around the announcement of the runway location in December 2007 and around its commissioning in October 2011. Noise changes are measured using publicly known noise projections as well as detailed noise assessment data for 2007 and 2012. The results suggest very little realization of externality costs before noise is actually apparent. Once aircraft noise came into effect, a price devaluation of around 1.7% per decibel of additional noise due to the new runway is measured.