The Journal of Real Estate Finance and Economics

, Volume 38, Issue 2, pp 155–172 | Cite as

Do Repeated Wildfires Change Homebuyers’ Demand for Homes in High-Risk Areas? A Hedonic Analysis of the Short and Long-Term Effects of Repeated Wildfires on House Prices in Southern California

  • Julie Mueller
  • John Loomis
  • Armando González-Cabán
Article

Abstract

Unlike most hedonic studies that analyze the effects of a one-time event, this paper analyzes the effects of forest fires that are several years apart in a small geographical area. We find that repeated forest fires cause house prices to decrease for houses located near the fires. We test and reject the hypothesis that the house price reduction from one fire is equal to the house price reduction from a second fire. The first fire reduces house prices by about 10%, while the second fire reduces house prices by nearly 23%, a statistically significant difference. The pattern of these results are robust to several alternative econometric specifications.

Keywords

Hedonic property method Forest fires Implicit prices Willingness to pay 

Notes

Acknowledgements

We would like to acknowledge Patty Champ for her valuable comments, and David Mushinski for his suggestions on our econometric model. Funding provided by the USDA Forest Service and Colorado State University (Agricultural Experiment Station Regional Research Project W1133). The comments of an anonymous reviewer improved the breadth of analysis of this paper.

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Copyright information

© Springer Science+Business Media, LLC 2007

Authors and Affiliations

  • Julie Mueller
    • 1
  • John Loomis
    • 2
  • Armando González-Cabán
    • 3
  1. 1.Galen UniversityCayo DistrictBelize, Central America
  2. 2.Department of Agricultural and Resource EconomicsColorado State UniversityFort CollinsUSA
  3. 3.U.S.D.A. Forest Service, Pacific Southwest Research StationForest Fire LaboratoryRiversideUSA

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