The Monetary Valuation of Environmental Externalities through the Analysis of Real Estate Prices

Vincenzo Del Giudice,Fabiana Forte,Benedetto Manganelli,Pierfrancesco De Paola

doi:10.3390/su9020229

Abstract

This paper proposes a theoretical model of evaluation of environmental externalities based on the analysis of real estate prices. This issue is included in regional planning policies which include activities and interventions that produce economic and non-economic effects. The monetary assessment of economic and non-economic effects can be expressed as a forecast (ex ante) and/or following (ex post) such activities and interventions. The assessment of the economic impact, with particular reference to interventions and infrastructure work, is widely based on procedures which make use of market prices. The proposed model was applied to an actual case, considering the effects of noise pollution, produced by traffic from the Naples Beltway, on residential property.

Highlights

Among the monetary valuation methods of environmental externalities is the econometric analysis of real estate prices (Land Price Analysis), the logical basis of which lies in the principle that the price of real estate is affected, among other things, by the quality of the environment [1,2,3,4,5,6,7,8,9,10,11,12]
This study provides an evaluation model based on the analysis of environmental externalities in property prices
When the same changes produce variations on the value of other kinds of resources, the economic effects are added to those induced by environmental externalities

Summary

Introduction

Among the monetary valuation methods of environmental externalities is the econometric analysis of real estate prices (Land Price Analysis), the logical basis of which lies in the principle that the price of real estate is affected, among other things, by the quality of the environment [1,2,3,4,5,6,7,8,9,10,11,12] This principle postulates that properties are “receptors” of environmental externalities, which, in the same way as positional rents, are incorporated into the market prices [13]. It is proposed to define the evaluation scheme that allows

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Conclusion