In many urban areas, noise is a serious problem. Noise disturbs sleep, disrupts activities, hinders work, impedes learning, and causes stress (Linster, 1990). Indeed, surveys often find that noise is the most common disturbance in the home (Organization for Economic Cooperation and Development [OECD], 1988). And motor vehicles usually are the primary source of that noise (OECD, 1988)1.

Noise is a prominent enough problem that it measurably affects the value of homes. Econometric or “hedonic” price analyses measure this effect by estimating the sales price of a house as a function of a number of important characteristics, including the ambient noise level or distance from a major noise source (Nelson, 1978; Hall and Welland, 1987; O’Byrne et al., 1985). If such an analysis does not omit important determinants of sales price, it can tell us how much an additional decibel of noise (above a certain threshold) reduces the value of a home2. This $/decibel measure, multiplied by the average value of homes, the number of homes exposed to noise above a threshold, and the amount of motor-vehicle noise above a threshold, will tell us the external “damage cost” of motor-vehicle noise in and around the home. The cost of noise in and around the home then can be scaled by the ratio of time spent in all activities affected by motor-vehicle noise to time spent in or around the home, to produce the total external damage cost of motor-vehicle noise.

In this report, we present such a model of the total external damage cost of direct motor-vehicle noise in the U. S.3. We find that the external damage cost of direct motor-vehicle noise could range from as little as $100 million per year to approximately $40 billion per year (1990 data, 1991$), although we believe that the cost is not likely to exceed $5 billion. In sensitivity analyses presented at the end of the report, we show that this wide range is due primarily to uncertainty regarding the cost of noise per decibel above a threshold, the interest rate, the amount of noise attenuation due to ground cover and intervening structures, the threshold level below which damages are assumed to be zero, the density of housing alongside roads, average traffic speeds, and the cost of noise outside of the home.

The increasing cost of additional air pollution control has stimulated a search for less expensive market-based regulatory approaches. One market-based approach widely embraced by regulators and politicians is the accelerated retirement and scrappage of old automobiles. Businesses are granted emissions reductions credits by air quality regulators in exchange for removing old and presumably high-polluting automobiles from the road. In reviewing the data from recent programs and exploring assumptions made in evaluations of such programs, it was found that the air quality benefits are uncertain and may be small and that the costs may be higher than those for many other emission control strategies. In some regions and under some conditions, accelerated retirement programs may be much more effective than in other regions and under other conditions.