Aircraft Noise Derivatives

Changing noise levels have a severe impact on house prices and through the leveragein nancing on households wealth. This risk is essential for houses close to airportswith uncertain aircraft regimes. We design and calibrate real options based on aircraftnoise to hedge against noise risk. The underlying value is an index that measuresthe aircraft noise disturbance. The index depends on the geographical location, thedevelopment of the number of ight movements and potential changes in the operationvariants of an airport.[...]