Valuing natural amenities and flood risk: a hedonic house price approach

Environmental amenities play a key role in determining where people choose to live. Understanding the dynamics of preferences for environmental amenities is crucial for managing how a population co-exists with the landscape around them by informing sustainable planning in an environmental context. Identifying these preferences requires an estimation of people's willingness to pay for environmental amenities. These underlying prices are not always revealed explicitly through markets and therefore non-market values must be uncovered in some cases to reveal the full extent of how people value the environment. Studying housing markets can help reveal peoples' willingness to pay for environmental goods and services. The methodology for revealing people’s environmental preferences through the use of housing market data is known as the hedonic house price method and forms the basis of this thesis. The thesis applies the hedonic house price method to estimate implicit prices related to blue space and green space amenities, but also the dis-amenity of exposure to flood risk, in an Irish context. Advantage is taken of a large (>2million raw observations) dataset of sale and rental listings in Ireland, from 2006 to 2018, and also a complementary sub-sample of transaction prices with highly detailed dwelling characteristics, sourced from the daft.ie property website. Such a large amount of variation, combined with a wide-ranging robustness strategy based on the use of spatial fixed effects, improves identification by minimising omitted variable bias, a pervasive issue in the hedonic house price literature. This research also takes advantage of access to environmental data that is of the highest level of detail available in Ireland. Novel measures of environmental views are developed and help identify the aesthetic value of the environment as well as the recreational value which is identified using proximity metrics. Aesthetic measures are also employed as controls in analysing the competing relationship between coastal flood risk and sea views. As well as chapters on relevant literature, data, and methodology, there are three empirical chapters that apply the hedonic house price methodology included in this thesis: The first empirical chapter is related to coastal “blue space” amenities where the willingness to pay for coastlines by type and views of the sea is estimated. A novel and continuous measure of sea views is developed using 3D GIS viewshed simulation. The second chapter looks at how flood risk and flood events affect house prices in Ireland, and is a logical follow on from a focus on preferences for blue space exposure. The wide temporal range of the housing data allows for the before and after effect of the release of flood risk information, the construction of flood defences, and the occurrence of a flood event to be accounted for in the hedonic house price models. The third chapter is focussed on the willingness to pay for urban “green space” in Ireland. The purpose of these econometric and methodological investigations is to advance the understanding and modelling of individual preferences associated with housing decisions. This in turn should enable more informed policy decisions regarding the preferences for coastal and urban green space management, and future planning for flood risk which is projected to increase in future as a result of climate change.

Funder

Irish Research Council

Publisher

NUI Galway

Rights

Attribution-NonCommercial-NoDerivs 3.0 Ireland

cbn

Collections

University of Galway Theses (PhD Theses)