The Economic Valuation of the Environment and Public Policy A Hedonic Approach

About this book

The importance of the hedonic valuation approach in public policy evaluation and environmental value estimation is now widely accepted. This text is especially designed to illustrate the basic assumptions of the hedonic approach and highlight the strengths and weaknesses associated with it. Combining rigorous theoretical analysis, detailed empirical studies and an extensive history of hedonic valuation, the book is both an introduction to the field and an aid for professionals and practitioners. It includes: a comprehensive explanation of the basic theorem; extensive discussions on the utility of the approach in the evaluation of both small-scale and large-scale projects; detailed explanations of the applicability of the hedonic method by comparing estimated values for various environmental and public services; and an illustration of public policy and environmental valuation using readily-understood examples.

Contents

The hedonic approach: development of the hedonic conception; Rosen's method and work in the 1970s - Sherwen Rosen's breakthrough, Ohta's work; econometrics after the 1980s - criticisms from James Brown and Harvey Rosen, other econometric analyses; Scotchmer's crucial comments; reconsideration of capitalization theory. Theory of capitalization hypothesis: two types of capitalization - time series and comparative statics capitalization, cross sectional capitalization; theory of cross sectional capitalization - solution of Cobb-Douglass production and utilites, overestimation theorem and equality condition (Kanemoto's Theory); extension - the case of hetergeneous consumer and land use control for production, the case of short run evaluation; conclusion. Hedonic measure as an approximation of benefit: introduction; examination of overestimation ratio; results - the area covered by the project and overstimation ratio, the intensity of the project and overestimation ratio, the robustness of the results in different rates of substitution; an extension - CES functions, model and results, the case of hetergeneous consumers. Empirical examination of the accuracy of the hedonic approach: large national project evaluation; introduction of accessibility and the model revised; parameter estimation method and data - the data, results of the parameter estimation; results - the comparison of hedonic measures and the benefit, the comparison of the hedonic measure estimate by national hedonic functions and the benefit; conclusion. Comparison with contingent valuation method: meaning of comparison; air pollution; water pollution; conclusion. Estimation of hedonic price function: introduction; market segmentation and sample size for hedonic analysis; types of property data - bias of assessed prices, possibly bias in transaction data, housing price transformation into land price; explanatory characteristics of property - variables for housing land price function, housing price transformation into land price; explanatory characteristics of property - variables for housing land price function, variables for commerce or office use land in Japan; making variables fit the reality - institutional restriction, reliable distance measure on foot, introduction of accessibility measure, assignment of site-specific value; hedonic price function and unit and form of variables - unit of dependent variable, adjustment of a real estate price multi-period data, functional and variables' form and estimation. Hedonic price method in estimating the value of environmental and institutional regulation: introduction; changes in consumer preference on an upper level housing estate during 1934 and 1985 in Tokyo; amenity value - value of riverside park and flood risk value, value of access to a large-scale park and the value of railway services, values of a view of symbolic landscape - the case of flats in Tokyo, values of residential green vegetation environment and (Part Contents).

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