t A conceptual model of consumer sorting in markets for housing, labor and health
care is outlined and used to make three points about how benefit transfers are used for
environmental policy evaluation. First, the standard approach to assessing benefits of air
quality improvements by transferring the value of a statistical life from labor market studies
embeds several untested (but testable) assumptions. Second, if the cost of an environmental
policy exceeds its capitalized effect on housing prices, then the capitalization effect is an
insufficient statistic for determining whether benefits exceed costs. Third, there are several
ways in which equilibrium sorting models may be usefully extended to assess distributional
welfare effects of environmental policies.

• Can Understanding Spatial Equilibria Enhance Benefit Transfers for Environmental Policy Evaluation?