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The cost of floods in developing countries’ megacities: A hedonic price analysis of the Jakarta housing market, Indonesia

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  • José Cobián Álvarez
  • Budy P. Resosudarmo

Abstract

Although many megacities in developing countries experience floods that affect a large number of people, relatively few empirical studies have evaluated the costs involved. This paper estimates such costs by conducting a hedonic price analysis of the impacts of floods on the housing market in Jakarta. A robust regression technique on a simple linear transformation model, and a maximum likelihood estimation technique on the spatial lag version of the simple linear transformation model are utilized to estimate the correlation between the level of the 2007 floods and monthly housing rental prices in Jakarta, Indonesia. This paper concludes that in developing countries’ megacities the total cost of floods is not as considerable as the total estimated cost of making the city of Jakarta floodfree

Suggested Citation

  • José Cobián Álvarez & Budy P. Resosudarmo, 2018. "The cost of floods in developing countries’ megacities: A hedonic price analysis of the Jakarta housing market, Indonesia," Departmental Working Papers 2018-05, The Australian National University, Arndt-Corden Department of Economics.
  • Handle: RePEc:pas:papers:2018-05
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    2. Pei-Ing Wu & Yi Chen & Je-Liang Liou, 2021. "Housing property along riverbanks in Taipei, Taiwan: a spatial quantile modelling of landscape benefits and flooding losses," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(2), pages 2404-2438, February.
    3. Josphat Nyoni & Conilloois Gwatirisa & Yvette Nyasha Nyanzira & Martin Dandira & Elias Kandjinga, 2021. "The Plight of Women during and After Floods. A Case Study of the Mbire District, Zimbabwe," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(4), pages 44-49, April.
    4. Vito Frontuto & Silvana Dalmazzone & Francesco Salcuni & Alessandro Pezzoli, 2020. "Risk Aversion, Inequality and Economic Evaluation of Flood Damages: A Case Study in Ecuador," Sustainability, MDPI, vol. 12(23), pages 1-17, December.

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    More about this item

    Keywords

    Environmental economics; hedonic price analysis; spatial analysis; flood.;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
    • O21 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Planning Models; Planning Policy

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