Consider an area we typically don’t pay attention to in ESG: noise. Excessive noise from traffic or construction work causes more than just a nuisance. Continued exposure to loud noise can make people sick. Therefore, it is the government’s job to regulate acceptable noise levels and require employers to provide their employees with hearing protectors, etc., when working with noisy equipment.
But what about people who live along a busy road? They are constantly confronted with that noise. That is why there are rules in Europe that require noise abatement measures to be taken, such as building walls when a road passes areas where people live.
If you drive around Europe or Britain you see these sound walls and hills everywhere, but I don’t remember seeing them that often in the US. I don’t know if there are any regulations on noise pollution in the US, but in general my experience is that in the US noise pollution seems to be greater because no one is taking steps to reduce it.
But what if they do?
Enrico Moretti and Harrison Wheeler looked at the correlation between house prices and ambient noise levels. No surprises there. The more noise, the less valuable the house.
Correlation between house prices and ambient noise levels
Source: Moretti and Wheeler (2025)
Naturally, richer people try to avoid living on a busy street, so they buy a more expensive house on a quiet side street or cul-de-sac, while poorer households cannot afford those houses and are therefore more affected by noise.
If noise abatement measures are put in place, house prices in the areas where noise levels have decreased will immediately increase. The research shows that house prices within a radius of 100 meters of a new noise barrier increase by 6.8% in the year after the barrier has been installed. Extrapolated to the entire United States, they estimate that the nationwide cost of noise pollution in the form of lower property values ​​is approximately $110 billion, which could be freed up if communities built noise barriers.
Real estate prices rise after noise barriers are installed
Source: Moretti and Wheeler (2025)
But here’s the interesting thing that I haven’t thought of before (probably because I live on a quiet street in a leafy area of ​​London). The energy transition is already reducing traffic noise.
Electric vehicles are obviously much quieter than cars with combustion engines, and the more we replace ICE cars with electric cars, the quieter our streets will become. As a result, housing prices near busy streets will increase more (now here’s an idea on how to make money as a property developer). For the US, the study estimates that widespread adoption of electric vehicles could increase real estate values ​​by a total of $77 billion.
It’s a shame, however, that the transition to electric cars in the US is lagging far behind what we experience in Europe or Asia. If I were a homeowner in the US, I would lobby for faster adoption of electric vehicles.
#Good #regulation #bad #regulation