FIGURE 7-1 Contour map showing Day-Night Average Sound Levels (DNL) around Ronald Reagan National Airport in Washington, D.C. Source: Reprinted with permission of EA Engineering, Science and Technology.

FIGURE 7-1 Contour map showing Day-Night Average Sound Levels (DNL) around Ronald Reagan National Airport in Washington, D.C. Source: Reprinted with permission of EA Engineering, Science and Technology.

rate ways. The committee also recognized that some likely variables for surface transportation noise, such as long-term noise reduction characteristics, installation costs, and maintenance costs of quiet pavements would not be available.

FHWA has developed a software tool called the Traffic Noise Model (TNM; FHWA, 2009b). The TNM is a useful tool for estimating sound pressure levels at various distances from a highway in terms of traffic mix, speeds, and other factors. Using various scenarios, noise reductions in decibels can be predicted by the model. However, no attempts have been made to monetize those benefits in terms of home values, sleep disturbance, or other measures of impact. The TNM could also provide information showing that quiet pavements could eliminate the need to construct a barrier or that a less expensive barrier would provide enough noise reduction, as measured at the property line.

The remainder of this chapter describes how environmental economic analysis techniques have been used by EPA and the FAA for purposes of cost-benefit analysis and how such analyses might be used for surface transportation noise. In addition, European efforts to conduct cost-benefit analyses on highway noise are reviewed, as is pavement research that will lead to lower noise levels and will be a vital input to any cost-benefit analysis model.

ENVIRONMENTAL ECONOMIC ANALYSIS

Microeconomics (i.e., the study of disaggregated entities and behaviors) is generally used rather than macroeconomics (i.e., the study of aggregates) to analyze environmental issues. When resources are scarce, economic analyses can help planners compare options to determine which uses of those resources will generate improvements in well-being for people who live near busy highways. Environmental economic analyses provide a rigorous, quantitative approach to support these decisions.

To compare relative values requires metrics that are comparable in terms of the outcomes each alternative produces (i.e., decibel reductions) as well as in terms of costs, both in dollars and negative effects (including eliminating potential desirable outcomes or benefits). Economists use monetary value to compare alternatives, and the conversion to monetary values of physical or social effects that are not naturally denominated in dollars is called monetization. The primary framework used to compare monetized positive and negative attributes of alternative policies and investment choices is called cost-benefit analysis (CBA) or benefit-cost analysis—the terms are interchangeable.

General guidelines for government entities conducting a CBA have been published by the Office of Management and Budget (OMB) in the form of circulars. For example, Circular A-94, first published in 1992 and updated annually, provides discount rates (OMB, 1992). Because OMB’s audience includes all federal agencies, the guidelines are general, rather than domain specific. Thus, Circular A-94 encourages monetization but does not offer specific guidance on monetization techniques.

Individual agencies often publish their own more detailed domain-specific guidelines. For instance, EPA published Guidelines for Preparing Economic Analyses, which covers nuances of CBA in the environmental arena and provides detailed guidelines for monetization (EPA, 2000). In comparison to the 21-page Circular A-94, EPA’s Guidelines includes more than 200 pages. One area in which EPA has authority to engage in CBA is noise (42 USC 65, Section 4913).

Because the reader may not be familiar with CBA as practiced by economists or with terms such as willingness to pay,



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