The Price of Pollution and Health: an Hedonic Approach

Résumé

This paper examines the impact of a reduction in sulfur dioxide concentration (SO2) in France on both health outcomes and property prices, at a municipality level, from 2008 to 2011. The paper aims to compare people’s willingness to pay for perceived differences in environmental attributes and the real cost in terms of health they are ex- posed to. To do so, I conduct a hedonic price method analysis using the recent closure affecting one oil refinery in the north of France, in September 2009, as a natural experi- ment. This contribution shows, first, that a long term shut down in the refining process leads to a reduction in sulfur dioxide concentration. I then use this exogenous shock to assess the impact of a change in air pollution concentration on hospital respiratory admission and property prices. The estimates suggest that the hedonic approach may not always reflect the true environmental health risks.