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Public perceptions of earthquake risk and its impact on land pricing: The case of the Uemachi fault line in Japan


  • Gu, Tao
  • Nakagawa, Masayuki
  • Saito, Makoto
  • Yamaga , Hisaki


In this paper, we explore how asset pricing reflects public perceptions of earthquake risk using officially appraised prices of land situated along the Uemachi fault, lying along a north-south axis in the east of Osaka prefecture in Japan. We find that active fault risk has been included significantly in land pricing, only since residents and even policymakers first realized considerable earthquake risk involved in the land along the Uemachi fault by observing that in January 1995, the earthquake driven by the Rokko-Awaji fault had catastrophic damages on the southern part of Hyogo prefecture. We estimate that nonresidential land prices along the Uemachi fault are discounted by 4 percent for every 100 meters closer to the fault line.

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  • Gu, Tao & Nakagawa, Masayuki & Saito, Makoto & Yamaga , Hisaki, 2012. "Public perceptions of earthquake risk and its impact on land pricing: The case of the Uemachi fault line in Japan," Discussion Papers 2012-07, Graduate School of Economics, Hitotsubashi University.
  • Handle: RePEc:hit:econdp:2012-07

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    References listed on IDEAS

    1. Naoi, Michio & Seko, Miki & Sumita, Kazuto, 2009. "Earthquake risk and housing prices in Japan: Evidence before and after massive earthquakes," Regional Science and Urban Economics, Elsevier, vol. 39(6), pages 658-669, November.
    2. Brookshire, David S, et al, 1985. "A Test of the Expected Utility Model: Evidence from Earthquake Risks," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 369-389, April.
    3. Masayuki Nakagawa & Makoto Saito & Hisaki Yamaga, 2009. "Earthquake Risks And Land Prices: Evidence From The Tokyo Metropolitan Area," The Japanese Economic Review, Japanese Economic Association, vol. 60(2), pages 208-222.
    4. Okmyung Biny & Stephen Polasky, 2004. "Effects of Flood Hazards on Property Values: Evidence Before and After Hurricane Floyd," Land Economics, University of Wisconsin Press, vol. 80(4).
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    More about this item


    active faults; earthquake risk; hedonic land pricing; public perceptions;

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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