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Spatial spillovers ...
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Carolin, PommeranzRWTH Aachen University, School of Business and Economics, Aachen, Germany
(author)
Spatial spillovers in the pricing of flood risk : Insights from the housing market
- Article/chapterEnglish2020
Publisher, publication year, extent ...
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2020-11-30
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Taylor & Francis,2020
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electronicrdacarrier
Numbers
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LIBRIS-ID:oai:DiVA.org:kth-284047
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https://urn.kb.se/resolve?urn=urn:nbn:se:kth:diva-284047URI
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https://doi.org/10.1080/10527001.2020.1839336DOI
Supplementary language notes
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Language:English
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Summary in:English
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Subject category:ref swepub-contenttype
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Subject category:art swepub-publicationtype
Notes
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QC 20230411
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In this study, we analyse how, and to what extent, direct and indirect effects (spatial spillovers) matter when estimating price effects for a property location in a flood zone. Unlike the previous literature, we show the importance of indirect effects resulting from a neighbourhood being situated in a flood zone. Additionally, the type of indirect effects (global vs. local) needs to be determined theoretically or empirically using an appropriate spatial model comparison approach. Using the Bayesian model comparison for data related to the flood-prone city of Dresden, Germany, we find strong evidence for a spatial Durbin error model which controls for local spillover effects. These indirect price effects amount to -6.5% for houses and -4.8% for condominiums. However, direct effects diminish when controlling for spatial spillovers. Our results are mostly robust across different model specifications, urban areas, and risk-adjusted prices that include future insurance costs, thus providing evidence of the importance of addressing indirect effects in the form of local spillovers in the analysis of flood zone effects. Ignoring indirect flood effects when formulating policy can lead to flood management that is inefficient and not cost-effective, as the economic consequences of flood are underestimated.
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Steininger, Bertram I.KTH,Fastighetsekonomi och finans(Swepub:kth)u125gmog
(author)
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RWTH Aachen University, School of Business and Economics, Aachen, GermanyFastighetsekonomi och finans
(creator_code:org_t)
Related titles
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In:Journal of Housing Research: Taylor & Francis29:sup1, s. S54-S851052-70012691-1337
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