Three essays on environmental valuation: the social value of carbon storage in wetlands, the impact of wind turbines on home prices, and the effect of flood risk on home prices
Date
2017
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Publisher
University of Delaware
Abstract
Climate change is a growing threat to socioeconomic systems at all geographic scales, from local to global. Each of the three essays in this paper looks at a different economic aspect of climate change, from the value of a blue carbon sink, the impact of renewable energy technology on property prices, and the effect of changing flood risk and coastal amenities on property prices. ☐ The first essay in this work looks at valuing changes in the economic value of carbon stored in tidal wetlands undergoing land cover change. Coastal wetland systems are highly effective at sequestering and storing carbon dioxide, and represent an important “Blue Carbon” sink. This essay first develops an economic model for valuing carbon sequestration and then applies the model to the Delaware Estuary. The annual value of net carbon sequestration is found to be between $5,000 and $44,000, and the Delaware estuary is losing between $165,000 and $7.33 million in sequestration potential each year, depending on discount rate used. The results of this study are useful for land management decisions in Delaware, and the model developed can be applied to valuing carbon sequestration in any ecosystem, provided sequestration rates are known. ☐ The second essay investigates the impact of the University of Delaware’s Wind Turbine in Lewes, Delaware, on local property prices. Wind turbine developments are frequently met with fervent local opposition, citing concerns over changing views, noise, and wildlife impacts, which may lead to reduced property prices. Using a hedonic valuation approach and advanced GIS techniques, this study finds no significant impact of the UD Wind Turbine on the majority of local property prices, with the exception of properties that are located closest to the turbine and are in full view. Results of this study are an important addition to the wind energy hedonic literature, contributing a study on the impacts of a single turbine to a literature that has largely focused on the effects of larger wind farm developments. ☐ The third essay looks at how flood risk affects property prices. Floods are among the costliest natural disasters and the National Flood Insurance Program is stretched thin. Using a hedonic valuation approach and advanced GIS techniques, this study looks at the extent to which a range of coastal amenities, including flood risk, are capitalised in the property market in coastal Sussex County, Delaware. I find evidence that property owners are in fact willing to pay a premium to live in flood zones, indicating that the amenity effect of living close to the ocean surpasses the perceived risk of flooding. Results from this work provide evidence in opposition to a number of studies in the literature that find lower property prices in flood zones, demonstrating the importance of considering other coastal amenities.
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Keywords
Applied sciences, Social sciences, Health and environmental sciences, Blue carbon, Coastal management, Environmental economics, Hedonic price model, Policy