Abstract
Recent projections on sea level rise (SLR) show that approximately 32% and 22.62% of Lagos City will be inundated by 2100 and 2050, respectively. There are also few empirical estimates of the impact of such forecasts on the current price of residential real estates that are highly exposed to the SLR. In that regard, this study investigates the effects of proximity to the oceanfront and exposure to SLR on the current price of residential real estate in Lagos, a coastal city in Nigeria. The study employs a hedonic pricing model (HPM), and the results reveal three key findings. First, the results show that beachfront residential real estate sells at a 5.2% premium for every kilometre closer to the coastline. Second, the estimates show that residential real estate highly exposed to SLR sells at a 0.5% discount relative to a comparable unexposed property. Third, analysis indicates that Nigeria’s real estate market expects a 37-year window before a 1 km2 is completely underwater, rendering affected residential real estate worthless. Overall, these findings were interpreted as evidence that environmental amenities and climate risks are priced in Nigeria’s real estate market. Therefore, this study concludes that both climate change and proximity to the coast influence the current price of residential real estate in the coastal city of Lagos, Nigeria.
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The data used in this study is secondary data, all obtained from open source. However, this can be made available upon request.
Notes
See Benoit [27] for interpreting coefficients in logarithmically models with logarithmic transformations: Log-linear model.
In addition, column (C) demonstrates a similar negative relationship between house price and distance to the oceanfront.
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The research funding from the Ministry of Science and Higher Education of the Russian Federation (Ural Federal University project within the Priority-2030 Program) is gratefully acknowledged.
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All authors have significantly contributed to the development of the study conception and design. Conceptualisation and introduction were done by Aliyu Rafindadi Sanusi; methodology and analysis were done by Jamilu Iliyasu; literature review and discussion were done by Suleiman Onimisi Mamman; and literature review and conclusion were done by Yakubu Abubakar. All authors read and approved the final manuscript.
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Iliyasu, J., Sanusi, A.R., Mamman, S.O. et al. Pricing Environmental Amenities and Climate Change Risks in Real Estate Market. Environ Model Assess 28, 999–1010 (2023). https://doi.org/10.1007/s10666-023-09919-9
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DOI: https://doi.org/10.1007/s10666-023-09919-9