Is flood risk capitalised into property values?

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Is flood risk capitalised into property values? / Beltran Hernandez, Allan; Maddison, David; Elliott, Robert.

In: Ecological Economics, Vol. 146, 04.2018, p. 668-685.

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@article{d492534de3484bde97d5222761afdb69,
title = "Is flood risk capitalised into property values?",
abstract = "Economic theory suggests that, other things being equal, properties located within a floodplain should suffer a price discount. A survey of the existing evidence nonetheless reveals that this price discount lies anywhere between −75.5 percent to a +61.0 percent price premium. The objective of this paper is to summarise and explore the wide variation in the empirical results to obtain {\textquoteleft}best{\textquoteright} estimates with which to guide policy decisions. Results from our meta-analysis comprising 37 published works and 364 point estimates indicate the existence of marked differences between studies according to when and where they were conducted. For coastal regions the results show that properties located in the floodplain command higher prices; this finding is however likely to be caused by a high correlation between omitted coastal amenities and flood risk. There is moreover, some evidence that publication bias affects the coastal flooding literature. Results from meta-regression analyses intended to uncover sources of heterogeneity confirm that controlling for time elapsed since the most recent flood is especially important. For inland flooding the price discount associated with location in the 100-year floodplain is −4.6 percent. Although other estimates are defensible, we suggest this figure be used as a rule of thumb to determine the benefits of flood relief projects to households. ",
keywords = "Flood risk, Hedonic valuation, Meta-analysis, Meta-regression",
author = "{Beltran Hernandez}, Allan and David Maddison and Robert Elliott",
year = "2018",
month = apr,
doi = "10.1016/j.ecolecon.2017.12.015",
language = "English",
volume = "146",
pages = "668--685",
journal = "Ecological Economics",
issn = "0921-8009",
publisher = "Elsevier",

}

RIS

TY - JOUR

T1 - Is flood risk capitalised into property values?

AU - Beltran Hernandez, Allan

AU - Maddison, David

AU - Elliott, Robert

PY - 2018/4

Y1 - 2018/4

N2 - Economic theory suggests that, other things being equal, properties located within a floodplain should suffer a price discount. A survey of the existing evidence nonetheless reveals that this price discount lies anywhere between −75.5 percent to a +61.0 percent price premium. The objective of this paper is to summarise and explore the wide variation in the empirical results to obtain ‘best’ estimates with which to guide policy decisions. Results from our meta-analysis comprising 37 published works and 364 point estimates indicate the existence of marked differences between studies according to when and where they were conducted. For coastal regions the results show that properties located in the floodplain command higher prices; this finding is however likely to be caused by a high correlation between omitted coastal amenities and flood risk. There is moreover, some evidence that publication bias affects the coastal flooding literature. Results from meta-regression analyses intended to uncover sources of heterogeneity confirm that controlling for time elapsed since the most recent flood is especially important. For inland flooding the price discount associated with location in the 100-year floodplain is −4.6 percent. Although other estimates are defensible, we suggest this figure be used as a rule of thumb to determine the benefits of flood relief projects to households.

AB - Economic theory suggests that, other things being equal, properties located within a floodplain should suffer a price discount. A survey of the existing evidence nonetheless reveals that this price discount lies anywhere between −75.5 percent to a +61.0 percent price premium. The objective of this paper is to summarise and explore the wide variation in the empirical results to obtain ‘best’ estimates with which to guide policy decisions. Results from our meta-analysis comprising 37 published works and 364 point estimates indicate the existence of marked differences between studies according to when and where they were conducted. For coastal regions the results show that properties located in the floodplain command higher prices; this finding is however likely to be caused by a high correlation between omitted coastal amenities and flood risk. There is moreover, some evidence that publication bias affects the coastal flooding literature. Results from meta-regression analyses intended to uncover sources of heterogeneity confirm that controlling for time elapsed since the most recent flood is especially important. For inland flooding the price discount associated with location in the 100-year floodplain is −4.6 percent. Although other estimates are defensible, we suggest this figure be used as a rule of thumb to determine the benefits of flood relief projects to households.

KW - Flood risk

KW - Hedonic valuation

KW - Meta-analysis

KW - Meta-regression

U2 - 10.1016/j.ecolecon.2017.12.015

DO - 10.1016/j.ecolecon.2017.12.015

M3 - Article

VL - 146

SP - 668

EP - 685

JO - Ecological Economics

JF - Ecological Economics

SN - 0921-8009

ER -