Building the Breathable City

What impact does air quality have on land values? This fundamental question is at the heart of our intuitive understanding of how cities in the industrial revolution developed. However, we know comparatively little on the specifics of this relationship between air quality and development values. In this report we set out to respond to this challenge in four ways. Firstly, we provide a comprehensive literature review on the influence of air quality on property prices.

Secondly, we propose an innovative approach to inferring land values from the price of the property accommodated on that land. Thirdly, we specify a spatio-temporal model that allows us to make an association between the effects of changes in air quality on land values. By applying this model to three Chinese case study cities – Shenzhen, Suzhou and Zhengzhou – we are able to present financial estimates of the impact of improved air quality on the value of development land forecast to be released over the coming years. Fourthly, we draw on a program of semi-structured interviews to present policy maker and expert reflections on our findings and their potential to support policy development.