Accessibility, air pollution, and congestion: Capturing spatial trade-offs from agglomeration in the property market

The economies of scale and network effects from agglomeration form the foundation of the economic geography of cities. These agglomerations can be associated with transportation accessibility benefits and negative externalities from increased levels of harmful emissions, both of which are impacted by congestion. Such factors imply a tension between the economies and diseconomies of agglomeration in cities. This research employs real estate transaction data to examine whether spatial trade-offs occur between the benefits and negative impacts of agglomeration in the single-detached property market around two highways in Hamilton, Canada. Our novel disaggregate approach operationalizes agglomeration using empirical estimates of accessibility to employment with calibrated impedance functions; micro-scale dispersion modelling of harmful emissions of particulate matter (PM2.5); and congestion effects in each. Descriptive analyses reveal areas of transport advantage and environmental disadvantage and cross-sectional spatio-temporal hedonic models find evidence of an agglomeration trade-off in the study area. Results suggest that households value high levels of accessibility in locations that do not experience the corresponding environmental costs from traffic. In contrast, for locations with high access and high exposure, the access benefits of agglomeration are offset by environmental costs. This approach can be used to examine the dynamics of locational advantage, spatial justice, and how trade-offs between the economies and diseconomies of urban agglomeration inform the urban spatial structure of cities.