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Flooding risks and housing markets: a spatial hedonic analysis for La Plata City

Published online by Cambridge University Press:  06 January 2016

Mariano Javier Rabassa  and
Juan Ignacio Zoloa
Mariano Javier Rabassa
Affiliation:
Facultad de Economía and Facultad de Ciencias Fisicomatemáticas e Ingeniería, Pontificia Universidad Católica Argentina, 1600 Av. Alicia Moreau de Justo, Edificio San José, C1107AAZ, Buenos Aires, Argentina. E-mail: mariano_rabassa@uca.edu.ar
Juan Ignacio Zoloa
Affiliation:
Departamento de Economía, Universidad Nacional de La Plata, La Plata, Argentina. E-mail: juan.zoloa@econo.unlp.edu.ar
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Abstract

On 2 April 2013 a major flood struck the City of La Plata, Argentina, killing 89 people and displacing thousands of others. That event, the worst flood the city has suffered in the past 100 years, prompted plans for a new hydraulic infrastructure. Although such an investment is necessary, little is known about its benefits. This paper intends to shed some light on this issue by estimating the willingness to pay to avoid the risk of experiencing a flooding event. For this purpose, we have taken thousands of real estate prices in the La Plata Metropolitan Area and combined them with a high-resolution flood risks map to estimate spatial hedonic price models. The results show significant price discounting for properties in flood-prone areas.

Type
Research Article
Information
Environment and Development Economics , Volume 21 , Issue 4 , August 2016 , pp. 464 - 489
Copyright
Copyright © Cambridge University Press 2016 

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