ACDE Trade & Development Seminars
Date & time
In 1992 Japan introduced an Automobile NOx Control Law (ANCL) to improve urban air quality. A key feature of the law was a ban on high-emitting diesel vehicles from registering in designated areas after certain grace periods. In this paper we use location-specific data to evaluate the effect of this geographically-focused policy on nitrogen dioxide (NO2) pollution and land values. Our estimates suggest that the intervention on average led to a 4.3 per cent reduction in annual mean ambient concentrations of NO2 in designated areas, relative to non-designated areas. Using an instrumental variable approach, we find estimates of the elasticity of residential land prices with respect to NO2 concentrations of around –0.55. The estimate implies that the improvements in air quality induced by the ANCL resulted in an increase in residential land values in the designated areas of around US$40 per square meter as of 2015.