With the growing environmental pollution and adverse climatic conditions, it is now a globally vibrant topic whether housing prices should be associated with the quality of the environment in a particular region. From the microeconomic approach to environmental economics, it is proposed that property prices in any region should be associated with the environmental quality-the concept of hedonic pricing. A negative association between low magnitudes of pollution and high house prices is a precondition to achieving the aim of sustainable development. The study thus starts with the objective of investigating whether there are long-term relations and short-term dynamics between the magnitudes of pollution and house price in the panel of the world’s high-polluting and low-polluting cities for the period of 2012–2021 across 30 cities. Using appropriate time-series econometric procedures such as panel cointegration, panel VECM, and the Wald Test, the study arrives at the conclusion that magnitudes of pollution and house prices in the cities are cointegrated with a stable long-term relationship in all panels. Further, there are strong causal interplays in both the long- and short-term between pollution and house prices in most of the panels of the cities. Thus, policy makers should consider making proper valuations of environmental services to control pollution at the city levels first and then at global levels to reach the proposed goal of sustainable development.

Nexus between Housing Price and Magnitude of Pollution: Evidence from the Panel of Some High- and-Low Polluting Cities of the World

Ivaldi Enrico
2022-01-01

Abstract

With the growing environmental pollution and adverse climatic conditions, it is now a globally vibrant topic whether housing prices should be associated with the quality of the environment in a particular region. From the microeconomic approach to environmental economics, it is proposed that property prices in any region should be associated with the environmental quality-the concept of hedonic pricing. A negative association between low magnitudes of pollution and high house prices is a precondition to achieving the aim of sustainable development. The study thus starts with the objective of investigating whether there are long-term relations and short-term dynamics between the magnitudes of pollution and house price in the panel of the world’s high-polluting and low-polluting cities for the period of 2012–2021 across 30 cities. Using appropriate time-series econometric procedures such as panel cointegration, panel VECM, and the Wald Test, the study arrives at the conclusion that magnitudes of pollution and house prices in the cities are cointegrated with a stable long-term relationship in all panels. Further, there are strong causal interplays in both the long- and short-term between pollution and house prices in most of the panels of the cities. Thus, policy makers should consider making proper valuations of environmental services to control pollution at the city levels first and then at global levels to reach the proposed goal of sustainable development.
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11567/1096242
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