by CW Kim, TT Phipps, L Anselin
Journal of Environmental Economics and Management 45(1): 24-39
2003| Econometric models using hedonic valuation that do not include spatial considerations can affect both the size and significance of the findings. The hedonic housing price model identifies price factors according to internal characteristics and external factors affecting it. The external spatial factors in this research are the marginal value of improvements in sulfur dioxide (SO2) and nitrogen dioxide (NOx) concentrations. The primary objective of this paper is to use a spatial methodology in conjunction with a basic hedonic housing price model to measure the marginal value of air quality improvement in Seoul, South Korea. The research concluded that owners are willing to pay (WTP) a little more for a slight change in air quality. A permanent 4% improvement is worth about $2333 per household, or 1.4% of the mean house value. The value of air quality owners expects to receive over the life of the house is capitalized into its price. The authors conclude that the incorporation of direct and induced spatial effects (air quality) into the hedonic price model of the home successfully captures the neighborhood effects, which could not be used in non-spatial techniques. |