Estimation of economic values of flood-related characteristics using the hedonic pricing method

Abstract

During the last few decades, rapid urbanization has intensified with economic development and population growth, prompting more than half of the global population to live in urbanized cities. At the same time, severe social problems have emerged in urbanized cities along with the failure to control the physical and economic expansion of the cities. Among these social problems, the climate change risks induced by lack of infrastructure for climate change adaptation have increased. To this end, assessment of the climate change impacts is becoming increasingly important. Flood which is one of the climate change impacts is selected as a main topic to be analyzed in this thesis. Using the hedonic pricing method, the impacts of the characteristics associated with flood on housing prices are identified. The linear, semi-log, and double-log multiple regression analysis are conducted on 2,500 apartments that were traded in Seoul for the year 2014. The characteristics associated with flood are divided into two aspects. One aspect is the temporal and spatial characteristics of rainfall consisting of the average rainfall and average rainfall intensity that are expected to increase due to climate change. Another aspect is the infrastructure characteristic showing the level of infrastructure for flood prevention, which is represented as the ratio of impervious surface. The results of this study show that the apartment prices are negatively affected as average rainfall, average rainfall intensity and impervious surface ratio increase. Furthermore, this study, which analyzes the impacts of the flood-related characteristics on the housing prices, shows the possibility of evaluating the economic values of climate in Korea.