Short-term rentals and urban air pollution: evidence from Barcelona and Madrid

Purpose This paper aims to examine the effect of short-term rentals on urban air pollution in Barcelona and Madrid from 2018 to 2023. Design/methodology/approach The authors combine detailed platform-level data on Airbnb and Vrbo listings with satellite-based measures of district-level air pollution, allowing for a granular analysis of local environmental externalities. To address the endogeneity of STR location choices, the authors implement a shift–share instrumental variable strategy that exploits predetermined proximity to tourist amenities interacted with time variation in global Airbnb search intensity. Findings The estimates show that increases in STR density lead to higher local concentrations of carbon monoxide (CO) and tropospheric ozone (O3). The authors further document that STR expansion is associated with increased traffic and a higher concentration of hospitality-related establishments, shedding light on the mechanisms linking peer-to-peer accommodation to urban pollution. Originality/value By focusing on short-term rental platforms rather than aggregate tourism flows, and by leveraging high-resolution pollution data at the district level, this paper contributes to the urban economics literature on local externalities and provides new evidence on the environmental costs of platform-mediated tourism in large cities.