Forest Disturbance Impacts on Residential Property Values

  • Robert J. HuggettJr.
  • Elizabeth A. Murphy
  • Thomas P. Holmes
Part of the Forestry Sciences book series (FOSC, volume 79)

Natural environments and the amenities they offer have fueled much of the population growth in the rural United States (Deller et al. 2001, English et al. 2000). In fact, the fastest growing counties in the United States during the early 1990s were non-metropolitan counties that were destinations for retirees or that offered outdoor recreation opportunities (Johnson and Beale 1994). Migration to these rural and exurban areas from urban and suburban locations, along with growth in the United States population, has resulted in an increased mixing of humans, their artifacts, and natural environments. These expanding interface and intermix areas expose more lives and property not only to desirable natural amenities, but also to natural disturbances and disamenities.

This chapter seeks to provide a basic framework for modeling the effects of forest and other natural disturbances on property markets. The modeling section will begin by introducing the hedonic property model in a simple, accessible format. Several important modeling issues and aspects of forest disturbances that make them special in regard to describing their impact on property markets will be discussed next. These include the tension between risks and amenities embodied in a forest resource, the temporal dynamics of disturbance manifestation, and spatial dependence among observed outcomes present challenges to capturing the effects of disturbance shocks. Two case studies will follow, examining the price responses of residential housing to wildfire and an invasive species, the hemlock woolly adelgid. The chapter will conclude with a discussion of management and policy implications of disturbance shocks to property markets.

Keywords

Burning Migration Income Eter Rosen 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Acharya, G., and L. L. Bennett. 2001. Valuing open space and land-use patterns in urban watersheds. Journal of Real Estate Finance and Economics 22(2/3):221-237.CrossRefGoogle Scholar
  2. Anderson, L. M., and H. K. Cordell. 1985. Residential property values improved by landscaping with trees. Southern Journal of Applied Forestry 9(3):162-166.Google Scholar
  3. Anselin, L. 1988. Spatial econometrics: Methods and models. Kluwer Academic Publishers, Dordrecht, The Netherlands.Google Scholar
  4. Bartik, T. J. 1988. Measuring the benefits of amenity improvements in hedonic price models. Land Economics 64(2):172-183.CrossRefGoogle Scholar
  5. Bell, K., and N. Bockstael. 2000. Applying the generalized-moments estimation approach to spatial problems involving microlevel data. The Review of Economics and Statistics 82:72-82.CrossRefGoogle Scholar
  6. Bernknopf, R. L., D. S. Brookshire, and M. A. Thayer. 1990. Earthquake and volcano hazard notices: An economic evaluation of changes in risk perceptions. Journal of Environmental Economics and Management 18:35-49.CrossRefGoogle Scholar
  7. Beron, K. J., J. C. Murdoch, M. A. Thayer, and W. P. M. Vijverberg. 1997. An analysis of the housing market before and after the 1989 Loma Prieta earthquake. Land Economics 73 (1):101-113.CrossRefGoogle Scholar
  8. Bin, O., and S. Polasky. 2004. Effects of flood hazards on property values: Evidence before and after Hurricane Floyd. Land Economics 80(4):490-500.CrossRefGoogle Scholar
  9. Brookshire, D. S., M. A. Thayer, J. Tshirhart, and W. Schulze. 1985. A test of the expected utility model: Evidence from earthquake risks. Journal of Political Economy 93(2):369-389.CrossRefGoogle Scholar
  10. Carroll, M. S., A. J. Findley, K. A. Blatner, S. R. Mendez, S. E. Daniels, and G. B. Walker. 2000. Social assessment for the Wenatchee National Forest wildfires of 1994: Targeted analysis for the Leavenworth, Entiat, and Chelan Ranger Districts. Gen. Tech. Rep. PNW-GTR-479. USDA Forest Service, Portland, OR.Google Scholar
  11. Coarse-scale Spatial Data for Wildland Fire and Fuel Management [Online]. 1999. Prescribed fire and fire effects research work unit, Rocky Mountain Research Station. Available online at www.fs. fed. us/fire/fuelman.
  12. Cropper, M. L., L. Deck, and K. E. McConnell. 1988. On the choice of functional form for hedonic price functions. Review of Economics and Statistics 70(4):668-675.CrossRefGoogle Scholar
  13. Deeming, J. E., R. E. Burgan, and J. D. Cohen. 1977. The national fire danger rating system. Gen. Tech. Rep. INT-39. USDA Forest Service, Ogden, UT.Google Scholar
  14. Deller, S. C., T-H Tsai, D. W. Marcouiller, and D. B. K. English. 2001. The role of amenities and quality of life in rural economic growth. American Journal of Agricultural Economics 83:352-365.CrossRefGoogle Scholar
  15. Dombrow, J., M. Rodriguez, and C. F. Sirmans. 2000. The market value of mature trees in single-family housing markets. The Appraisal Journal 68(1):39-43.Google Scholar
  16. Donovan, G. H., P. A. Champ, and D. T. Butry. 2007. The impact of wildfire risk on housing price: A case study from Colorado Springs. Land Economics 83(2):109-124.Google Scholar
  17. English, D. B. K., D. W. Marcouiller, and H. K. Cordell. 2000. Tourism dependence in rural America: Estimates and effects. Society & Natural Resources 13:185-202.CrossRefGoogle Scholar
  18. Freeman, A. M. 1993. The measurement of environmental and resource values. Resources for the Future, Washington, D. C.Google Scholar
  19. Garrod, G. D., and K. G. Willis. 1992a. The amenity value of woodland in Great Britain: A comparison of economic estimates. Environmental and Resource Economics 2 (4):415-434.CrossRefGoogle Scholar
  20. Garrod, G. D., and K. G. Willis. 1992b. The environmental impact of woodland: A two-stage hedonic price model of the amenity value of forestry in Britain. Applied Economics 24(7):715-728.CrossRefGoogle Scholar
  21. Geoghegan, J. 2002. The value of open spaces in residential land use. Land Use Policy 19:91-98.CrossRefGoogle Scholar
  22. Geoghegan, J., L. A. Wainger, and N. E. Bockstael. 1997. Spatial landscape indicies in a hedonic framework: An ecological economic analysis using GIS. Ecological Economics 23 (3):251-264.CrossRefGoogle Scholar
  23. Holmes, T. P., E. A. Murphy, and K. P. Bell. 2006. Exotic forest insects and residential property values. Agricultural and Resource Economics Review 35:155-166.Google Scholar
  24. Huggett Jr., R. J. 2003. Fire in the wildland-urban interface: An examination of the effects of wildfire on residential property markets. Ph. D. Dissertation, North Carolina State University, Raleigh.Google Scholar
  25. IFCI [International Fire Code Institute]. 2000. Urban-wildland interface code. International Fire Code Institute, Whittier, CA.Google Scholar
  26. Johnson, K. M., and C. L. Beale. 1994. The recent revival of widespread population growth in non-metropolitan areas of the United States. Rural Sociology 59:655-667.Google Scholar
  27. Kask, S. B., and S. A. Maani. 1992. Uncertainty, information, and hedonic pricing. Land Economics 68(2):170-184.CrossRefGoogle Scholar
  28. Loomis, J. B. 2004. Do nearby forest fires cause a reduction in residential property values? Journal of Forest Economics 10(3):149-157.CrossRefGoogle Scholar
  29. Morales, D. J. 1980. The contribution of trees to residential property value. Journal of Arboriculture 6(11):305-308.Google Scholar
  30. NFPA [National Fire Protection Association]. 2002. NFPA 1144 standard for protection of life and property from wildfire. National Fire Protection Association, Quincy, MA.Google Scholar
  31. Payne, B. R. 1973. The twenty-nine tree home improvement plan. Natural History 82 (9):74-75.Google Scholar
  32. Payne, B. R., and S. Strom. 1975. The contribution of trees to the appraised value of unimproved residential land. Valuation October/November:36-45.Google Scholar
  33. Portney, P. R. 1981. Housing prices, health effects, and valuing reductions in risk of death. Journal of Environmental Economics and Management 8:72-78.CrossRefGoogle Scholar
  34. PricewaterhouseCoopers. 2001. Economic study of the Los Alamos post-fire residential real estate market. Prepared for the U. S. Federal Emergency Management Agency, Office of Cerro Grande Fire Claims. Available online at http://www. fema. gov/news/ newsrelease. fema?id=10049.
  35. Rapp, V. 2002. Fire risk in east-side forests. Science Update. USDA Forest Service, Pacific Northwest Research Station. September: pp. 1-12.Google Scholar
  36. Rosen, S. 1974. Hedonic prices and implicit markets: Product differentiation in pure competition. Journal of Political Economy 82(1):34-55.CrossRefGoogle Scholar
  37. Royle, D. D., and R. G. Lathrop. 1997. Monitoring hemlock forest health in New Jersey using LANDSAT TM data and change detection. Forest Science 43(3):327-335.Google Scholar
  38. Schultz, S. D., and D. A. King. 2001. The use of census data for hedonic price estimates of open-space amenities and land use. Journal of Real Estate Finance and Economics 22 (2/3):239-252.CrossRefGoogle Scholar
  39. Taylor, L. O. 2003. The hedonic method. In: A Primer on Nonmarket Valuation, P. Champ, K. Boyle, and T. Brown (eds. ). Dordrecht, The Netherlands, Kluwer Academic Publishers. p. 331-393.Google Scholar
  40. Tryväinen, L. 1997. The amenity value of the urban forest: An application of the hedonic pricing method. Landscape and Urban Planning 37:211-222.CrossRefGoogle Scholar
  41. Tryväinen, L., and A. Miettinen. 2000. Property prices and urban forest amenities. Journal of Environmental Economics and Management 39(2):205-223.CrossRefGoogle Scholar
  42. Wells, A. R. 2001. Applications of the hedonic price method and geographic information systems in Northern Arizona. Unpublished Masters Thesis, Northern Arizona University, Flagstaff.Google Scholar

Copyright information

© Springer Science + Business Media B.V. 2008

Authors and Affiliations

  • Robert J. HuggettJr.
    • 1
  • Elizabeth A. Murphy
    • 2
  • Thomas P. Holmes
    • 1
  1. 1.Southern Research StationUnited States Forest ServiceResearch Triangle Park
  2. 2.Department of Economics and Legal Studies in BusinessOklahoma State UniversityStillwater

Personalised recommendations