Sunday, March 3, 2019

The changing face of environmental services: heterogeneity in housing sub-markets and weather


>>>Environmental services show heterogeneous capitalization patterns in housing and time sub-markets.

>>>Volcanic parks and beaches can lead to discounts or premiums through the distribution of prices.

>>>Households compensate for open space ecosystem services and development regulations.

>>>The result of the exchange depends on the submarket in which we focus.


The value of environmental services has been studied for decades in the hedonic literature on housing prices. Numerous studies have found that services such as marine, river and forest habitats, national and regional reserves, urban parks or wetlands contribute positively to the formation of housing prices. Work is scarce when considering the heterogeneity between sub-markets and time. Auckland, the largest city in New Zealand, has a unique landscape with openspaces, waterways, coastal areas and volcanic features. 

The local housing market is highly segmented and the city has gone through a cycle of bursting, recovery and boom in the last decade. This document incorporates heterogeneity through sub-markets and time, and examines how the capitalization of services affects housing prices. We built a data set of approximately 280,000 sales transactions between 2000 and 2016 in Auckland and estimated hedonic models based on regressions of unconditional quantiles. We found different patterns of capitalization in housing sub-markets. Beaches can add price premiums of 5.1% on houses at the upper end of the distribution, but also price discounts of 2.1% on houses at the lower end of the distribution. You can visit Dhaka City Election 2019.

We use a detailed categorization of the parks and found that volcanic parks can add premiums for houses at the 70% percentile and above the price distribution, but they also imply values ​​of price discounts for houses around the average price and under. We argue that the different effects occur due to the compensations between the regulations to protect the facilities and the ecosystem services that they provide, conditioned to the specific    aspects of the location of the houses.

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