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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.

Suggested Citation

  • Trudy Ann Cameron, 2003. "Directional Heterogeneity in Distance Profiles in Hedonic Property Value Models," University of Oregon Economics Department Working Papers 2003-17, University of Oregon Economics Department, revised 01 Jul 2003.
  • Handle: RePEc:ore:uoecwp:2003-17
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    File URL: http://economics.uoregon.edu/papers/UO-2003-17_Cameron_Directional_Heterogeneity.pdf
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. repec:eee:jeeman:v:85:y:2017:i:c:p:110-129 is not listed on IDEAS
    3. Schaafsma, Marije & Brouwer, Roy & Rose, John, 2012. "Directional heterogeneity in WTP models for environmental valuation," Ecological Economics, Elsevier, vol. 79(C), pages 21-31.
    4. Maximilian Auffhammer & Antonio M. Bento & Scott E. Lowe, 2011. "The City-Level Effects of the 1990 Clean Air Act Amendments," Land Economics, University of Wisconsin Press, vol. 87(1), pages 1-18.
    5. Barr, Jason & Cohen, Jeffrey P., 2014. "The floor area ratio gradient: New York City, 1890–2009," Regional Science and Urban Economics, Elsevier, vol. 48(C), pages 110-119.
    6. 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.
    7. repec:spr:envpol:v:20:y:2018:i:1:d:10.1007_s10018-017-0190-9 is not listed on IDEAS
    8. 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.
    9. Patrick J. Walsh & J. Walter Milon & David O. Scrogin, 2011. "The Spatial Extent of Water Quality Benefits in Urban Housing Markets," Land Economics, University of Wisconsin Press, vol. 87(4), pages 628-644.
    10. Irfan Muhammad, 2017. "Disamenity impact of Nala Lai (open sewer) on house rent in Rawalpindi city," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 19(1), pages 77-97, January.
    11. John Braden & Xia Feng & DooHwan Won, 2011. "Waste Sites and Property Values: A Meta-Analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(2), pages 175-201, October.
    12. Henry J. Munneke & C.F. Sirmans & Barrett A. Slade & Geoffrey K. Turnbull, 2014. "Housing Regulation, Externalities and Residential Property Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 42(2), pages 422-456, June.
    13. 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.
    14. 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.
    15. Lynne Y. Lewis & Curtis Bohlen & Sarah Wilson, 2008. "Dams, Dam Removal, And River Restoration: A Hedonic Property Value Analysis," Contemporary Economic Policy, Western Economic Association International, vol. 26(2), pages 175-186, April.
    16. 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).
    17. 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.
    18. 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.
    19. 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.
    20. Yinger, John, 2015. "Hedonic markets and sorting equilibria: Bid-function envelopes for public services and neighborhood amenities," Journal of Urban Economics, Elsevier, vol. 86(C), pages 9-25.
    21. 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.

    More about this item

    JEL classification:

    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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