Valuing the ecological quality of the urban environment using hedonic pricing method

Abstract

Development of sustainable cities needs the natural and human living in a harmony way. River is an important natural attribute, which has a closed relationship with the development of the city. The purpose of the study is to use hedonic pricing method to assess the economic value of the river in Nanyang city. The novelty of the study lies in the development of econometric models, which use two explanatory variables as metrics of environmental quality - the distance from the residential property to the river and the beauty of the river landscape. Three hedonic pricing models using dummy variables to reflect distance and landscape were developed and analyzed. Simulation results showed that the distance to the river has a positive effect on property price when the distance between them is less than 200 meters. The price of property with river vision will be 9.8 % higher than the price of property without river vision. The results of the study demonstrate a fairly high economic value of the river and the need to implant economic assessments of the ecological quality of the urban environment into the strategic management of sustainable cities’ development.