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Assessing the Value of Clean Air in a Developing Country: A Hedonic Price Analysis of the Jakarta Housing Market, Indonesia

Author

Listed:
  • Arief Anshory Yusuf

    (Australian National University, Research School of Pacific and Asian Studies)

  • Budy P. Resosudarmo

    (Australian National University, Research School of Pacific and Asian Studies)

Abstract

This paper is motivated by the common argument that clean air is a luxury good and has much less or even no value in a less developed country. It applies a hedonic property value analysis, a method commonly used to infer the value of clean air in developed countries, using a combination of data on house values and their characteristics from the Indonesian Family Life Survey, and data of the ambient level of six different pollutants in Jakarta, Indonesia. The result suggests that air quality may affect property value in Jakarta, indicating a preference toward environmental amenities. Moreover, this study is one of the first hedonic studies that may potentially give comparable estimates of the value of clean air in developing countries.

Suggested Citation

  • Arief Anshory Yusuf & Budy P. Resosudarmo, 2006. "Assessing the Value of Clean Air in a Developing Country: A Hedonic Price Analysis of the Jakarta Housing Market, Indonesia," Economics and Environment Network Working Papers 0601, Australian National University, Economics and Environment Network.
    • Handle: RePEc:anu:eenwps:0601
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    References listed on IDEAS

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    1. Jeffrey E. Zabel & Katherine A. Kiel, 2000. "Estimating the Demand for Air Quality in Four U.S. Cities," Land Economics, University of Wisconsin Press, vol. 76(2), pages 174-194.
    2. Brasington, David M. & Hite, Diane, 2005. "Demand for environmental quality: a spatial hedonic analysis," Regional Science and Urban Economics, Elsevier, vol. 35(1), pages 57-82, January.
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    4. Harrison, David Jr. & Rubinfeld, Daniel L., 1978. "Hedonic housing prices and the demand for clean air," Journal of Environmental Economics and Management, Elsevier, vol. 5(1), pages 81-102, March.
    5. Palmquist, Raymond B., 1982. "Measuring environmental effects on property values without hedonic regressions," Journal of Urban Economics, Elsevier, vol. 11(3), pages 333-347, May.
    6. Geoghegan, Jacqueline & Wainger, Lisa A. & Bockstael, Nancy E., 1997. "Spatial landscape indices in a hedonic framework: an ecological economics analysis using GIS," Ecological Economics, Elsevier, vol. 23(3), pages 251-264, December.
    7. Robert Mendelshohn & Daigee Shaw (ed.), 1996. "The Economics of Pollution Control in the Asia Pacific," Books, Edward Elgar Publishing, number 733.
    8. Mingche M. Li & H. James Brown, 1980. "Micro-Neighborhood Externalities and Hedonic Housing Prices," Land Economics, University of Wisconsin Press, vol. 56(2), pages 125-141.
    9. Nelson, Jon P., 1978. "Residential choice, hedonic prices, and the demand for urban air quality," Journal of Urban Economics, Elsevier, vol. 5(3), pages 357-369, July.
    10. Smith, V Kerry & Huang, Ju-Chin, 1995. "Can Markets Value Air Quality? A Meta-analysis of Hedonic Property Value Models," Journal of Political Economy, University of Chicago Press, vol. 103(1), pages 209-227, February.
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    Cited by:

    1. Liu Guangping & Zhang Guo & Li Yanfei & Yu Yang, 2024. "The Heterogeneous Effect and Transmission Paths of Air Pollution on Housing Prices: Evidence from 30 Large- and Medium-Sized Cities in China," Economics - The Open-Access, Open-Assessment Journal, De Gruyter, vol. 18(1), pages 1-17.

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    More about this item

    Keywords

    Hedonic Prices; Air Pollution; Indonesia;
    All these keywords.

    JEL classification:

    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • Q21 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Demand and Supply; Prices
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General

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