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Flood prone risk and amenity values: a spatial hedonic analysis

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  • Samarasinghe, Oshadhi
  • Sharp, Basil
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    Abstract

    This study examines the impact of flood-hazard zone location on residential property prices. The study utilises data from over 2000 private residential property sales occurred during 2006 in North Shore City, New Zealand. A spatial autoregressive hedonic model is developed to provide efficient estimates of the marginal effect of flood prone risks on property prices. Results suggest that the sale price of a residential property within a flood prone area is lower than an equivalent property outside the flood prone area. The flood plain location discount is reduced by the release of public information regarding flood risk.

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    File URL: http://purl.umn.edu/162020
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    Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

    Volume (Year): 54 (2010)
    Issue (Month): 4 (December)
    Pages:

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    Handle: RePEc:ags:aareaj:162020
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    Keywords: amenity value; flood hazard; information; spatial hedonic; Land Economics/Use; Risk and Uncertainty;

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    1. Won Kim, Chong & Phipps, Tim T. & Anselin, Luc, 2003. "Measuring the benefits of air quality improvement: a spatial hedonic approach," Journal of Environmental Economics and Management, Elsevier, vol. 45(1), pages 24-39, January.
    2. Robert W. Paterson & Kevin J. Boyle, 2002. "Out of Sight, Out of Mind? Using GIS to Incorporate Visibility in Hedonic Property Value Models," Land Economics, University of Wisconsin Press, vol. 78(3), pages 417-425.
    3. Kurt J. Beron & James C. Murdoch & Mark A. Thayer & Wim P. M. Vijverberg, 1997. "An Analysis of the Housing Market before and after the 1989 Loma Prieta Earthquake," Land Economics, University of Wisconsin Press, vol. 73(1), pages 101-113.
    4. Linneman, Peter, 1980. "Some empirical results on the nature of the hedonic price function for the urban housing market," Journal of Urban Economics, Elsevier, vol. 8(1), pages 47-68, July.
    5. Case, Anne C, 1991. "Spatial Patterns in Household Demand," Econometrica, Econometric Society, vol. 59(4), pages 953-65, July.
    6. Arthur Grimes & Yun Liang, 2007. "Spatial Determinants of Land Prices in Auckland:Does the Metropolitan Urban Limit Have an Effect?," Working Papers 07_09, Motu Economic and Public Policy Research.
    7. Basu, Sabyasachi & Thibodeau, Thomas G, 1998. "Analysis of Spatial Autocorrelation in House Prices," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 61-85, July.
    8. Okmyung Bin & Jamie Brown Kruse & Craig E. Landry, 2008. "Flood Hazards, Insurance Rates, and Amenities: Evidence From the Coastal Housing Market," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 75(1), pages 63-82.
    9. Randall S. Guttery & Stephen L. Poe & C. F. Sirmans, 2004. "An Empirical Investigation of Federal Wetlands Regulation and Flood Delineation: Implications for Residential Property Owners," Journal of Real Estate Research, American Real Estate Society, vol. 26(3), pages 229-316.
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    Cited by:

    1. Stefano Balbi & Carlo Giupponi & Roland Olschewski & Vahid Mojtahed, 2013. "The economics of hydro-meteorological disasters: approaching the estimation of the total costs," Working Papers 2013-12, BC3.
    2. Timar, Levente & Grimes, Arthur & Fabling, Richard, 2015. "That Sinking Feeling: The Changing Price of Disaster Risk Following an Earthquake," 2015 Conference (59th), February 10-13, 2015, Rotorua, New Zealand 202982, Australian Agricultural and Resource Economics Society.
    3. Christopher L Ambrey & Christopher M Fleming, 2011. "Valuing scenic amenity using life satisfaction data," Discussion Papers in Economics economics:201103, Griffith University, Department of Accounting, Finance and Economics.
    4. Neelawala, Prasad & Wilson, Clevo & Athukorala, Wasantha, 2013. "The impact of mining and smelting activities on property values: a study of Mount Isa city, Queensland, Australia," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(1), March.
    5. Parvin Mahmoudi & Darla Hatton MacDonald & Neville D. Crossman & David M. Summers & John van der Hoek, 2013. "Space matters: the importance of amenity in planning metropolitan growth," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(1), pages 38-59, 01.
    6. Levente Timar & Arthur Grimes & Richard Fabling, 2015. "Before a Fall: Impacts of Earthquake Regulation and Building Codes on the Commercial Building Market," Working Papers 15_19, Motu Economic and Public Policy Research.
    7. Balbi Stefano & Giupponi Carlo & Mojtahed Vahid & Olschewski Roland, 2015. "The Total Cost of Water-Related Disasters," Review of Economics, De Gruyter, vol. 66(2), pages 225-252, August.
    8. Mahmoudi, Parvin & MacDonald, Darla Hatton & Crossman, Neville D. & Summers, David M. & van der Hoek, John, 2013. "Space matters: the importance of amenity in planning metropolitan growth," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(1), March.

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