Exploring spillover effects of ecological lands: A spatial multilevel hedonic price model of the housing market in Wuhan, China

Abstract

This paper attempts to explore the spillover effects of ecological lands, including forest, grassland, wetland, and cultivated land, on housing prices. To this end, we test hypotheses from a spatial multilevel hedonic model in Wuhan, China. We find that forest size and wetland size has a linear positive spillover effect on urban housing prices, and a moderate grassland area and distance from wetland generates positive spillover effect on urban housing prices, while too much or poor grassland area and distance from wetland may not. Also, only cultivated land very proximity to urban residential areas may raise the housing prices, most of the cultivated land in our case may reduce the housing prices. This article contributes to the literature by integrating different ecological lands into the hedonic analysis based on spatial multilevel models and deepens the relationship between the accessibility and visibility of ecological lands and housing prices. This result implies that demand for the forest, grassland, and wetlands can be well reflected in the housing market, while demand for cultivated land is less reflected in the housing market. Our findings urge policymakers to increase the effective supply of ecological lands through urban development planning and maintain the continuous supply of existing ecological lands by implementing market, differential ecological protection mechanisms.