The Economic Valuation of the Environment and Public Policy

The Economic Valuation of the Environment and Public Policy

A Hedonic Approach

New Horizons in Environmental Economics series

Noboru Hidano

The importance of the hedonic valuation approach in public policy evaluation and environmental value estimation is now widely accepted. This book 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 a good introductory text to the field and a precise yet comprehensive aid for professionals and practitioners alike.

Chapter 8: Hedonic Price Method in Estimating the Value of Environment and Institutional Regulation

Noboru Hidano

Subjects: environment, environmental sociology, politics and public policy, public policy

Extract

8. Hedonic price method in estimating the value of environment and institutional regulation INTRODUCTION In this chapter, we examine several cases concerning the estimation of environmental values and the value of institutional measures using the hedonic price method. One of the strengths of the hedonic approach is that it enables us to depict the preferences of past consumers by a simple procedure using market price data. We can see the changes in consumer preference and the dynamics of a society from these analyses. After giving an example of this, we go on to present various estimations of implicit prices of environment and institutional regulation. CHANGES IN CONSUMER PREFERENCE ON AN UPPER-CLASS HOUSING ESTATE IN TOKYO, 1934 AND 1985 In any large urban areas in the world, there are several prestigious, exclusive or upper-class housing estates. Denenchofu, which developed in the 1920s, and literally means garden suburb in Chofu, is a good example in Tokyo. We shall examine the preference changes of the people on this housing estate during 1934 and 1985 (Yamaguchi and Hidano, 1988, cited in Hidano, 1997). We collected the sales price data in 1934 for the estate from a real estate agent’s brochure because we did not have any official detailed site-specific data for that year. In order to understand the changes in preferences, we use assessed land prices from a map of 1972 and of 1985 published by the Tokyo Real 71 72 The economic valuation of the environment and public policy Estate Association,...

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