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Externalities Imposed on Residential Properties in Highly Urbanized Areas


  • Cotteleer, Geerte
  • Peerlings, Jack H.M.


In highly industrialized areas open spaces such as farmland and nature are under pressure since urban areas are expanding at their expense. Because of the high opportunity costs of development in urban areas, a high price has to be paid for the maintenance or creation of open space. The question is if this high price can be justified by the value of the open space. We estimate the value residents attach to surrounding open space in a hedonic pricing model. More specifically, we investigate in a highly urbanized area in the Netherlands how the externalities of farmland, nature, and other uses, such as industrial areas and the sea affect residential property prices. Moreover, spatial lag and error dependence are corrected for in the hedonic pricing model used to estimate the value of open space and other externalities. According to our results premiums are paid by residents who buy properties close to urban parks and the North Sea and for properties with views on open space.

Suggested Citation

  • Cotteleer, Geerte & Peerlings, Jack H.M., 2008. "Externalities Imposed on Residential Properties in Highly Urbanized Areas," 2008 International Congress, August 26-29, 2008, Ghent, Belgium 43950, European Association of Agricultural Economists.
  • Handle: RePEc:ags:eaae08:43950

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    1. Cho, Seong-Hoon & Bowker, James Michael & Park, William M., 2006. "Measuring the Contribution of Water and Green Space Amenities to Housing Values: An Application and Comparison of Spatially Weighted Hedonic Models," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 31(03), December.
    2. Elena G. Irwin & Nancy E. Bockstael, 2001. "The Problem of Identifying Land Use Spillovers: Measuring the Effects of Open Space on Residential Property Values," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 83(3), pages 698-704.
    3. Ihlanfeldt, Keith R. & Taylor, Laura O., 2004. "Externality effects of small-scale hazardous waste sites: evidence from urban commercial property markets," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 117-139, January.
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    Hedonic pricing; Spatial econometrics; Externalities; Land Economics/Use;

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