Traffic-induced air pollution concerns and policy design

Traffic-induced air pollution causes environmental and health concerns, which affect households differently depending on where they live within the city. The intra-urban distribution of households might be more concentrated on central locations to reduce emissions if households are environmentally conscious, while a city of households who value local air quality in residential choice tends to be more dispersed to mitigate population exposure (e.g. Robson, 1976). Contrasting these two preferences raises questions of equity as to how much each household causes other residents to be exposed to air pollution and how much each household is itself affected by the location choice of others. This relative assessment, in turn, could influence households’ perception of air pollution at their residential location, which is subject to several psychological processes (Gatersleben & Uzzell 2000). The equity concern as a result of households’ perception and valuation of local air quality and of different urban policies is the focus of this work.
Some research has been conducted on the effects of urban structure on the environment in terms of emissions (e.g. Verhoef & Nijkamp, 2003; Stone et al., 2007), and on the exposure of households living at different locations in the city (e.g. Schweitzer & Zhou, 2010). However, few have contrasted both perspectives within the city (e.g. Martins, 2012; Schindler & Caruso, 2014) or analysed distance-related equity concerns arising from traffic-induced air pollution in this context (e.g. Ridder et al., 2008). This work aims at investigating the effects of different policy approaches on the two-way interactions between the location of households and the distribution of pollution and, thus, on intra-urban exposure-related equity ratios.
This work contributes to theoretical research by presenting an extension to the standard urban economics model by endogenous local pollution externalities arising from passing traffic, which has been analytically solved for equilibrium in a closed city framework. Comparative statics are performed which serve as impact analysis of various policy designs on intra-urban structure and equity ratios, such as technological improvements of vehicles and urban growth boundaries. Further, the model is adapted for optimum city where local pollution externalities are internalized through optimum distance-related toll levels. Finally, the work compares the effects of equilibrium and optimum city structure on equity ratios.