Abstract
One of the most evident casualties of a natural disaster is the property market. The private and social costs from such events run into millions of dollars. In this paper, we use a unique dataset to examine the impact on residential house prices affected by natural disasters using a hedonic property (HP) values approach. For this purpose, we use data before and after a wildfire and floods from Rockhampton in central Queensland, Australia. The data is unique because one suburb was affected by wildfires and another was affected by floods. For the analysis, three suburbs namely Frenchville, Park Avenue and Norman Gardens are used. Frenchville was significantly affected by wildfires in the latter part of 2009 and to a lesser extent in 2012, while Park Avenue was affected by floods at the end of 2010, January 2011-2013. Norman Gardens, which was relatively unaffected, is used as a control site. This enables us to examine the before and after effects on property values in the three suburbs. The results confirm that soon after a natural disaster property prices in affected areas decrease even though the large majority of individual houses remain unaffected. Furthermore, the results indicate that the largely unaffected suburb may gain immediately after a natural disaster but this gain may disappear if natural disasters continue to occur in the area/region due to the stigma created. The results have several important policy decision and welfare implications which are briefly discussed in the paper.
| Original language | English |
|---|---|
| Article number | 1640002 |
| Journal | Singapore Economic Review |
| Volume | 61 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - Mar 1 2016 |
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All Science Journal Classification (ASJC) codes
- Economics and Econometrics
Cite this
IMPACT of WILDFIRES and FLOODS on PROPERTY VALUES : A before and after ANALYSIS. / Athukorala, Wasantha; Martin, Wade E.; Neelawala, Prasad; Rajapaksa, Darshana Dewage Peiris Rajapaksa; Wilson, Clevo.
In: Singapore Economic Review, Vol. 61, No. 1, 1640002, 01.03.2016.Research output: Contribution to journal › Review article
}
TY - JOUR
T1 - IMPACT of WILDFIRES and FLOODS on PROPERTY VALUES
T2 - A before and after ANALYSIS
AU - Athukorala, Wasantha
AU - Martin, Wade E.
AU - Neelawala, Prasad
AU - Rajapaksa, Darshana Dewage Peiris Rajapaksa
AU - Wilson, Clevo
PY - 2016/3/1
Y1 - 2016/3/1
N2 - One of the most evident casualties of a natural disaster is the property market. The private and social costs from such events run into millions of dollars. In this paper, we use a unique dataset to examine the impact on residential house prices affected by natural disasters using a hedonic property (HP) values approach. For this purpose, we use data before and after a wildfire and floods from Rockhampton in central Queensland, Australia. The data is unique because one suburb was affected by wildfires and another was affected by floods. For the analysis, three suburbs namely Frenchville, Park Avenue and Norman Gardens are used. Frenchville was significantly affected by wildfires in the latter part of 2009 and to a lesser extent in 2012, while Park Avenue was affected by floods at the end of 2010, January 2011-2013. Norman Gardens, which was relatively unaffected, is used as a control site. This enables us to examine the before and after effects on property values in the three suburbs. The results confirm that soon after a natural disaster property prices in affected areas decrease even though the large majority of individual houses remain unaffected. Furthermore, the results indicate that the largely unaffected suburb may gain immediately after a natural disaster but this gain may disappear if natural disasters continue to occur in the area/region due to the stigma created. The results have several important policy decision and welfare implications which are briefly discussed in the paper.
AB - One of the most evident casualties of a natural disaster is the property market. The private and social costs from such events run into millions of dollars. In this paper, we use a unique dataset to examine the impact on residential house prices affected by natural disasters using a hedonic property (HP) values approach. For this purpose, we use data before and after a wildfire and floods from Rockhampton in central Queensland, Australia. The data is unique because one suburb was affected by wildfires and another was affected by floods. For the analysis, three suburbs namely Frenchville, Park Avenue and Norman Gardens are used. Frenchville was significantly affected by wildfires in the latter part of 2009 and to a lesser extent in 2012, while Park Avenue was affected by floods at the end of 2010, January 2011-2013. Norman Gardens, which was relatively unaffected, is used as a control site. This enables us to examine the before and after effects on property values in the three suburbs. The results confirm that soon after a natural disaster property prices in affected areas decrease even though the large majority of individual houses remain unaffected. Furthermore, the results indicate that the largely unaffected suburb may gain immediately after a natural disaster but this gain may disappear if natural disasters continue to occur in the area/region due to the stigma created. The results have several important policy decision and welfare implications which are briefly discussed in the paper.
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U2 - 10.1142/S0217590816400026
DO - 10.1142/S0217590816400026
M3 - Review article
VL - 61
JO - Singapore Economic Review
JF - Singapore Economic Review
SN - 0217-5908
IS - 1
M1 - 1640002
ER -