search query: @indexterm ECONOMETRIC MODELS / total: 1046
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| Author: | Gopalakrishnan, S. (et. al) |
| Title: | The value of disappearing beaches: a hedonic pricing model with endogenous beach width |
| Journal: | Journal of Environmental Economics and Management
2011 : MAY, VOL. 61:3, p. 297-310 |
| Index terms: | econometric models valuation empirical research optimization coastal regions climate |
| Language: | eng |
| Abstract: | Beach nourishment is a policy used to rebuild eroding beaches with sand dredged elsewhere. Previous studies suggest beach width positively affecting coastal property values, but they ignore the dynamic features of beaches and nourishment's feedback on shoreline retreat. We correct for the resulting attenuation and endogeneity bias in a hedonic property value model by using beach width as an instrumental variable and applying spatially varying coastal geological features. The beach width coefficient is found to be nearly five times larger than the OLS estimate, suggesting that beach width accounts for a much larger portion of property value than previously thought. The empirical results are used to parameterize a dynamic optimization model of beach nourishment decisions and the predicted interval between nourishment projects is shown to be closer to observed from the data when the estimate from the instrumental variables model is used instead of OLS. As coastal communities orient themselves to climate change, we find that the long-term net value of coastal residential property can fall by even 52% in the case of tripled erosion rate and quadruple cost of nourishment sand. |
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