Quality Effects of Investment Projects and Their Effect on Current House Prices: Application of Hedonic Pricing Approach

Lamessa Addisu Gosa

doi:10.7176/jesd/12-9-03

Abstract

By virtue of their nature, all sorts of investment projects pose environmental disamenities like disfiguration of the natural scene, congestion, noise and pollution of different types. The study is framed to examine environmental impacts of investment projects (Hansom Glass Factory) and their effects on houses transaction values in Adama town (Picock area). Estimation of such negative impacts on current house values, which is reflected as a proxy estimation of distance from the project, was measured using a Hedonic Pricing Approach. Data on current values of residential houses in Adama town (Picock) were taken considering residences residing up to 2300 meters away from the factory for the year 2015. Data were generated for 170 houses at random that reside to the West and South-West directions of Hansom Glass Factory. A Hedonic Price Function was employed for analyzing the data using STATA(11). The study came up with that many of the hypothesized variables significantly affected house transaction prices at different levels of probability (P<0.001 and P<0.05). The result revealed that residential houses that reside bordering the factory were valued less significantly than their equivalents built away from the factory. Positioning investment projects (industrial parks) explicitly at periphery of towns can avoid coincidence of investment externalities with societal, environmental and economic welfare. To minimize externalities investment projects, emerging cities and towns should develop inclusive master plans forecasts that explicitly identifies future land use for future development agendas. In addition, there should be multidimensional environmental and social impact assessment carried out be external experts before implementation of such projects. Keywords: Hedonic pricing, Industrial parks, House values, Externality DOI: 10.7176/JESD/12-9-03 Publication date: May 31 st 2021

Highlights

This study examined the negative impacts of a factory on residential house values
A study made on Egyptian workers in glass industry indicated noise, exposures to respirable airborne particulates especially silica www.iiste.org (SiO2) that leads to chronic effects such as decreased pulmonary function, lung disease, complicated pneumoconiosis and silico-tuberculosis, ergonomic hazards, physical hazards, radiant energy, heat stress disorders and infrared radiation (Abdel-Rasoul, et al, 2013)
The central theme of this paper was to estimate the impact of Honsom Glass Factory on current residential house transaction values in Adama town (Picock area) using a hedonic pricing model during the year 2017

Summary

Introduction

There are many factories being built in Ethiopia and the number of these factories is increasing sharply beginning from 2000 and taking a share of about 21.31% of the country's GDP. The majority of these factories (small and large scale) are mainly confined to Addis Ababa. Factories should be established on the basis of legal entities that favor environmental social welfare in the vicinity of the project. There should be responsibility for this and any body of a country representation should ensure that each investment project must be subjected to an initial environmental review (FAO, 2012)

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