FLOODING RISK AND HOUSING VALUES: AN ECONOMIC ASSESSMENT OF ENVIRONMENTAL HAZARD

Vanessa Daniel (), Raymond Florax and Piet Rietveld
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Vanessa Daniel: Department of Spatial Economics, Vrije Universiteit

No 07-02, Working Papers from Purdue University, College of Agriculture, Department of Agricultural Economics

Abstract: 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 flooding risk. Using these implicit price estimates and their associated standard errors, we perform a meta-analysis and find that houses located in the 100-year floodplain have a –0.3 to –0.8% lower price. 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 flooding risk.

Keywords: Manufactured Housing; valuation, environmental risk, meta-analysis, hedonic pricing (search for similar items in EconPapers)
JEL-codes: D81 Q51 Q54 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007
New Economics Papers: this item is included in nep-agr, nep-env, nep-rmg and nep-ure
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Citations: View citations in EconPapers (2)

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http://ageconsearch.umn.edu/bitstream/7333/2/wp070002.pdf (application/pdf)

Related works:
Journal Article: Flooding risk and housing values: An economic assessment of environmental hazard (2009)
Working Paper: FLOODING RISK AND HOUSING VALUES: AN ECONOMIC ASSESSMENT OF ENVIRONMENTAL HAZARD (2007)
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Persistent link: https://EconPapers.repec.org/RePEc:pae:wpaper:07-02

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