Environmental risk and housing price: An empirical study of Nanjing, China

Abstract

Abstract Some previous studies have investigated the impact of environmental risk on housing price, which focused mainly on a certain type of environmental risk. Studies are lacking on the associations between housing price and total environmental risks considering various types of risks within a city. We conducted an empirical study in Nanjing, China. We first assessed the spatially resolved accidental risks of chemical-industrial enterprises, gas stations, expressways, and the cumulative risks of soil heavy metal pollution and atmospheric PM2.5 pollution. We then derived the total environmental risks in Nanjing. Finally, we applied the hedonic price model to investigate the impacts of total and specific environmental risks on housing price. The results show that the higher environmental risks of gas stations and chemical enterprises were associated with lower housing prices. In addition, associations between housing price and the environmental risks of expressways and atmospheric PM2.5 were positive. The different associations for different risks led to an inverted U-shaped association between housing price and total environmental risk. In areas with lower total environmental risks, major risk types were heavy metals in the soil and air pollution risks. Soil and air pollution levels increase as the distance to urban centers decreases. The spatial heterogeneity of soil and air pollution risks is not easily perceived. When people are purchasing a residence, they probably do not consider the risk factors of soil and air pollution but focus instead on the factors of location, structure, and neighborhood. Thus, housing price was positively associated with total environmental risks. In areas with higher total environmental risks, gas stations and chemical enterprises started to show their impacts. Since these risks are high and perceivable, people avoid these kinds of risks, and thus, housing price was shown to be negatively associated with total environmental risk.