TY - JOUR
T1 - Flooding risk and housing values: an economic assessment of environmental hazard
AU - Daniel, V.E.
AU - Florax, R.J.G.M.
AU - Rietveld, P.
PY - 2009
Y1 - 2009
N2 - Climate change, the 'boom and bust' cycles of rivers, and altered water resource management practice have caused significant changes in the spatial distribution of the risk of flooding. Hedonic pricing studies, predominantly for the US, have assessed the spatial incidence of risk and the associated implicit price of flood risk. Using these implicit price estimates and their associated standard errors, we perform a meta-analysis and find that an increase in the probability of flood risk of 0.01 in a year is associated to a difference in transaction price of an otherwise similar house of - 0.6%. The actual occurrence of a flooding event or increased stringency in disclosure rules causes ex-ante prices to differ from ex-post prices, but these effects are small. The marginal willingness to pay for reduced risk exposure has increased over time, and it is slightly lower for areas with a higher per capita income. We show that obfuscating amenity effects and risk exposure associated with proximity to water causes systematic bias in the implicit price of flood risk. © 2009 Elsevier B.V. All rights reserved.
AB - Climate change, the 'boom and bust' cycles of rivers, and altered water resource management practice have caused significant changes in the spatial distribution of the risk of flooding. Hedonic pricing studies, predominantly for the US, have assessed the spatial incidence of risk and the associated implicit price of flood risk. Using these implicit price estimates and their associated standard errors, we perform a meta-analysis and find that an increase in the probability of flood risk of 0.01 in a year is associated to a difference in transaction price of an otherwise similar house of - 0.6%. The actual occurrence of a flooding event or increased stringency in disclosure rules causes ex-ante prices to differ from ex-post prices, but these effects are small. The marginal willingness to pay for reduced risk exposure has increased over time, and it is slightly lower for areas with a higher per capita income. We show that obfuscating amenity effects and risk exposure associated with proximity to water causes systematic bias in the implicit price of flood risk. © 2009 Elsevier B.V. All rights reserved.
U2 - 10.1016/j.ecolecon.2009.08.018
DO - 10.1016/j.ecolecon.2009.08.018
M3 - Article
SN - 0921-8009
VL - 69
SP - 355
EP - 365
JO - Ecological Economics
JF - Ecological Economics
IS - 2
ER -