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Directional Heterogeneity in Distance Profiles in Hedonic Property Value Models

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  • Trudy Ann Cameron

    ()
    (Department of Economics, University of Oregon)

Abstract

Failure to allow for directional heterogeneity can obscure otherwise statistically significant distance effects in hedonic property value models. If ambient pollution data are unavailable, researchers often rely upon distance from a point source of pollution as a proxy for ambient environmental quality. However, damages from all types of point-source disamenities may exhibit directional heterogeneity. We generalize conventional distance models to allow for directional effects and show that commonly used linear and quadratic spatial trend variables capture directional heterogeneity in a manner that has not previously been recognized. Appropriate spatial models can also inform the social planner’s problem of optimal allocation of source reduction across polluters. When independently calibrated tranport functions are not available, individual properties can be viewed as ambient receptor sites. Hedonic models can yield estimates of the product of marginal social damages from ambient concentrations and the change in ambient concentration per unit of emissions from each source. Optimal emissions depend upon the spatial distribution of all affected properties relative to each source, the parameters of the hedonic model, and marginal abatement costs.

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Bibliographic Info

Paper provided by University of Oregon Economics Department in its series University of Oregon Economics Department Working Papers with number 2003-17.

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Length: 33
Date of creation: 01 Jul 2003
Date of revision: 01 Jul 2003
Handle: RePEc:ore:uoecwp:2003-17

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  1. Bartik, Timothy J. & Smith, V. Kerry, 1987. "Urban amenities and public policy," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 31, pages 1207-1254 Elsevier.
  2. Dubin, Robin A, 1998. "Predicting House Prices Using Multiple Listings Data," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 35-59, July.
  3. Katherine A. Kiel, 1995. "Measuring the Impact of the Discovery and Cleaning of Identified Hazardous Waste Sites on House Values," Land Economics, University of Wisconsin Press, vol. 71(4), pages 428-435.
  4. Hite, Diane, et al, 2001. "Property-Value Impacts of an Environmental Disamenity: The Case of Landfills," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 185-202, March-May.
  5. Pace, R Kelley & Barry, Ronald & Sirmans, C F, 1998. "Spatial Statistics and Real Estate," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 5-13, July.
  6. Raymond B. Palmquist & Fritz M. Roka & Tomislav Vukina, 1997. "Hog Operations, Environmental Effects, and Residential Property Values," Land Economics, University of Wisconsin Press, vol. 73(1), pages 114-124.
  7. Kiel, Katherine & Zabel, Jeffrey, 2001. "Estimating the Economic Benefits of Cleaning Up Superfund Sites: The Case of Woburn, Massachusetts," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 163-84, March-May.
  8. Michaels, R. Gregory & Smith, V. Kerry, 1990. "Market segmentation and valuing amenities with hedonic models: The case of hazardous waste sites," Journal of Urban Economics, Elsevier, vol. 28(2), pages 223-242, September.
  9. Kevin Gillen & Thomas Thibodeau & Susan Wachter, . "Anistropic Autocorrelation in House Prices," Zell/Lurie Center Working Papers 383, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  10. Larry Dale & James C. Murdoch & Mark A. Thayer & Paul A. Waddell, 1999. "Do Property Values Rebound from Environmental Stigmas? Evidence from Dallas," Land Economics, University of Wisconsin Press, vol. 75(2), pages 311-326.
  11. Farber, Stephen, 1998. "Undesirable facilities and property values: a summary of empirical studies," Ecological Economics, Elsevier, vol. 24(1), pages 1-14, January.
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Cited by:
  1. Ran, Tao & Zhao, Jinhua, 2005. "Impacts of Livestock Operations: A Gaussian Dispersion Hedonic Approach," 2005 Annual meeting, July 24-27, Providence, RI 19116, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  2. Muhammad Irfan, 2007. "The Impact of Open Sewerage Smell on House Rent in Rawalpindi," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 46(4), pages 803-815.
  3. Mark P. Berkman & Kyle J. Hubbard & Timothy H. Savage, 2012. "The Adverse Impact of Particulate Matter on Property Values," International Real Estate Review, Asian Real Estate Society, vol. 15(2), pages 215-230.
  4. Bríd G Hanna & Daniel Hatch & Christopher Lominac, 2009. "Exposure to toxic pollution in new york state, 1998," Economics Bulletin, AccessEcon, vol. 29(2), pages 1087-1101.
  5. Yao, Richard T. & Scarpa, Riccardo & Turner, James A. & Barnard, Tim D. & Rose, John M. & Palma, João H.N. & Harrison, Duncan R., 2014. "Valuing biodiversity enhancement in New Zealand's planted forests: Socioeconomic and spatial determinants of willingness-to-pay," Ecological Economics, Elsevier, vol. 98(C), pages 90-101.
  6. Dennis Guignet, 2013. "What Do Property Values Really Tell Us? A Hedonic Study of Underground Storage Tanks," Land Economics, University of Wisconsin Press, vol. 89(2), pages 211-226.
  7. De Valck, Jeremy & Vlaeminck, Pieter & Liekens, Inge & Aertsens, Joris & Chen, Wendy & Vranken, Liesbet, 2012. "The sources of preference heterogeneity for nature restoration scenarios," Working Papers 146522, Katholieke Universiteit Leuven, Centre for Agricultural and Food Economics.
  8. Kuminoff, Nicolai V., 2009. "Using a Bundled Amenity Model to Estimate the Value of Cropland Open Space and Determine an Optimal Buffer Zone," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 34(1), April.
  9. Justin Ross & Michael Farmer & Clifford Lipscomb, 2011. "Inconsistency in Welfare Inferences from Distance Variables in Hedonic Regressions," The Journal of Real Estate Finance and Economics, Springer, vol. 43(3), pages 385-400, October.
  10. Peter Colwell & Henry Munneke, 2009. "Directional Land Value Gradients," The Journal of Real Estate Finance and Economics, Springer, vol. 39(1), pages 1-23, July.
  11. John Braden & Xia Feng & DooHwan Won, 2011. "Waste Sites and Property Values: A Meta-Analysis," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 50(2), pages 175-201, October.

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