2018 Fourth Quarter Journal Reviews: Property Values

2018 Fourth Quarter Journal Reviews: Property Values

Property Value Impacts of Wind Turbines and the Influence of Attitudes toward Wind Energy

Richard J. Vyn

Land Economics, Volume 94, Number 4, November 2018, pp. 496-516 (Article)

This article uses a hedonic analysis to investigate the effect of wind turbines on property values, and whether that effect seems to differ between communities that are opposed to wind power, versus those that support it. Past studies investigating the effect of wind turbines on property values have been mixed, with some studies showing negative effects, while other studies show no effects. This study hypothesizes that there may be other characteristics of the communities that influence any property value effects. Results indicate that property value impacts in communities that were opposed to the wind farm prior to construction were greater than those in communities in which no prior opposition was found. The author concludes that turbine impacts in a jurisdiction “may be influenced by attitudes toward wind energy in that jurisdiction, and that public perception regarding wind energy and its potential impacts is a prominent contributing factor to the nature of observed impacts on property values.”

Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market

Ortega, Francesc and Taṣpınar, Süleyman, 2018.

 “Rising sea levels and sinking property values: Hurricane Sandy and New York’s housing market,” Journal of Urban Economics, Elsevier, vol. 106(C), pages 81-100.

This paper analyzes the effects of Hurricane Sandy on the New York City housing market from 2003-2017. Their results indicate a persistent negative effect among properties within the flood zone that had not been damaged by the storm. In contrast, properties that had been damaged by the storm suffered an immediate negative price effect that was up to three times as great, followed by a gradual convergence to the level of nondamaged properties. The authors conclude that the housing market in New York City has been affected by greater awareness of flood risk following Hurricane Sandy.

Mercury pollution, information, and property values

Chuan Tang, Martin D. Heintzelman, Thomas M. Holsen

Journal of Environmental Economics and Management 92 (2018): 418-432.

Continuing our property value theme, Tang et al. investigated the influence of mercury pollution on property values, as an implicit value of mercury pollution reduction. They looked at approximately 83,000 property transactions in New York State over a 9-year period.  Results demonstrated that property values within one mile of a lake for which an advisory had been issued were 6-7 percent lower than similar properties surrounding a lake for which no such designation had been made. Their results “can serve as a partial indication of the benefits of the Mercury and Air Toxic Standards (MATS), which includes the first mercury emission standard in the United States.” It’s worth noting that the Environmental Protection Agency is currently reviewing a proposal that could undermine the MATS.

Eliciting preferences for urban parks

Toke Emil Panduro, Cathrine Ulla Jensen, Thomas Hedemark Lundhede, Kathrinevon Graevenitz, Bo Jellesmark Thorsen

Regional Science and Urban Economics Volume 73, November 2018, Pages 127-142

Yet another article investigates the effects of urban parks on adjacent property values.  The authors estimate residents’ willingness to pay for park availability in Copenhagen, Denmark, by investigating the effects of distance to a park and park density on apartment rents.  The authors claim: “‘Parks provide recreational opportunities for urban residents and visitors. Urban green spaces furthermore provide climate regulation functions, harbor biodiversity and provide other ecosystem services… However, in the absence of thorough insights into the values of urban green space, the need for such regulation [to provide urban parks] may be neglected whenever new neighborhoods are planned and developed.” One of the interesting things about this paper is that it investigates both proximity to and density of green spaces and finds that both measures are important and capture different components of willingness to pay.  The article finds that proximity to green space has a positive effect on apartment rents (meaning that people are willing to pay more to live near a green space, all else being equal), and that there may be a “saturation point” beyond which an additional park does not add significantly to household welfare. 

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