The environmental costs of airports’ aviation activities: a panel data econometric analysis of Italian airports

Aviation is a fast growing sector with increasing environmental concerns linked to aircrafts’ emissions during airport operations (LTO cycle, taxing, etc.) and noise nuisance. It is recognized that such externalities should be internalized within the sector’s costs and paid by agents operating in it. This paper is an attempt to tackle these issues, by analyzing the noise and emissions produced by the Italian airports during the period 1999-2008. We provide the methodology to compute the amount of pollution produced yearly by an airport and its instant average yearly level of noise. Two indices measuring the airport externalities levels, expressed as monetary social costs, are designed and computed. A panel data fixed effect econometric model is applied to a dataset covering information on airports’ externalities, activities, ownership and fleet characteristics. We show that a 1% increase in airport’s yearly movements yields a 1.018% increase in total externality costs, a 1% in aircraft’s size (measured in MTOW) gives rise to a 1.251% increase in costs and a 1% increase in aircraft age brings a 0.443% increase in externality costs. Other factors affecting social costs are aircraft manufacturers (total costs are lower the higher the share of movements operated by Airbus and Boeing aircrafts), engine manufacturers (CFM, Pratt-Whitney and Rolls-Royce engines are more costly) and the fraction of freight movements. Our policy implications are that the tariff internalizing the total social costs is about Euro 150 per flight, while the tariff limiting only pollution costs is about Euro 50 and that reducing noise is about Euro 100.