Are rural residents willing to trade-off higher noise for lower air pollution? Evidence from revealed preferences

Abstract

The rise in urbanization has led to an expansion of traditional urban externalities toward suburban and rural areas together with changes in the preferences of human populations for noise and air pollution. This paper analyses the preferences of the population living in rural, suburban and urban areas for noise and air pollution utilizing a revealed preference approach. Data on actual choices of residential location are analysed utilizing a Latent Class Discrete Choice model that raises two different groups of residents with different preferences for air and noise pollution. As expected and confirmed by the Multinomial and Mixed Logit models, the first group of the Latent Class model accepts higher levels of noise and air pollution in urban than in suburban and rural areas. However, the second group of residents have preferences for higher levels of noise and lower levels of air pollution in rural and suburban than in urban areas. Thus, results show some rural residents are willing to trade higher levels of noise for lower levels of air pollution, indicating adaptation of preferences to a lower level of the traditional tranquillity enjoyed in less densely populated rural areas.