Posted by Paul Cheshire, SERC and LSE
The Guardian reports that Justine Greening agrees with proponents of Boris Island that Heathrow is in the wrong place – “if you were starting from
scratch”. But the fact is that we
are not starting from scratch, and this has fundamentally important
implications for decisions on airport policy.
First, Heathrow has – admittedly inadequate – public transport
links already in place. Second, and even more importantly, one must consider
the costs any large airport inflicts on residents who might experience its
noise and pollution without compensation. The conventional answer is that these
are the people living near Heathrow. But it is not as simple as that.
Almost no one living in Southall, Richmond or Wraysbury
looks out of their windows and says – ‘What a surprise – there are noisy aeroplanes overhead’.
Almost no one has lived continuously in the affected area since 1965 (although one occasionally appears on TV, unearthed by a
journalist looking for a human interest story or a visiting politician).
Heathrow has been a big and noisy airport for at least 40
years. Some people live in the area because they work at the airport; some because
they are frequent users; but most live in the area because - all else equal -
the cost of housing is lower there.
Research on how housing markets work shows almost beyond
doubt that house prices and rents fully reflect all the costs of disamenities
such as aircraft noise, high crime or flood risk. In the same way, the cost of
housing quickly adjusts to reflect the value of better local state schools,
local parks or transport links.
What’s more, people pay not only for current amenities but also
for expected future values of those amenities, as I showed in
some 2004 research [pdf]. So it is not just the present experience of aircraft
noise and pollution that is reflected in house prices around Heathrow but reasonable
expectations about levels of that nuisance in the future.
So if we were truly starting with a clean slate, London’s
main hub airport would not be where Heathrow is. But given that Heathrow is
where it is, and has been there for more than a generation, it is in exactly
the best place in terms of compensating people for the noise and pollution it
causes. People who are affected have been compensated at least once via lower
house prices and in many cases twice - because they have received help to pay
for sound proofing their houses.
Wherever they are, aircraft and airports cause local nuisance and pollution. So we need to compensate
those affected by airports and reduce the environmental costs by taxing flying
appropriately. But the best way of compensating people is through the housing
market – and that implies not only Heathrow is 'in the right place', but that policymakers
should focus any necessary expansion of airport capacity where airports are
already located.
