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Flood Protection and Land Value Creation - Not All Resilience Investments Are Created Equal

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  • Avner,Paolo
  • Viguié,Vincent
  • Jafino,Bramka Arga
  • Hallegatte,Stephane

Abstract

This paper investigates the land value creation potential from flood mitigation investmentsin a theoretical and applied setting, using the urban area of Buenos Aires as a case study. It contributes to theliterature on the wider economic benefits of government interventions and the dividends of resilience investments.Using a simple urban economics framework that represents land and housing markets, it finds that not all floodmitigation interventions display the same potential for land value creation: where land is more valuable (city centersfor example), the benefits of resilience are higher. The paper also provides ranges for land value creation potentialfrom the flood mitigation works in Buenos Aires under various model specifications. Although the estimates varylargely depending on model parameters and specifications, in many cases the land value creation would be sufficient tojustify the investments. This result is robust even in the closed city configuration with conservative flood damageestimates, providing that the parameters remain reasonably close to the values obtained from the calibration. Finally,acknowledging that fully calibrating and running an urban simulation model is data greedy and time intensive—even asimple model as proposed here—this research also proposes reduced form expressions that can provide approximations forland value creation from flood mitigation investments and can be used in operational contexts.

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  • Avner,Paolo & Viguié,Vincent & Jafino,Bramka Arga & Hallegatte,Stephane, 2021. "Flood Protection and Land Value Creation - Not All Resilience Investments Are Created Equal," Policy Research Working Paper Series 9744, The World Bank.
  • Handle: RePEc:wbk:wbrwps:9744
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    More about this item

    Keywords

    Natural Disasters; Urban Housing and Land Settlements; Urban Governance and Management; Municipal Management and Reform; Urban Housing; Social Risk Management; Hazard Risk Management; Disaster Management; Climate Change Mitigation and Green House Gases; Transport Services;
    All these keywords.

    JEL classification:

    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures

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