Browsing by Author "Raymond Palmquist, Committee Chair"

Now showing 1 - 2 of 2

Fire in the Wildland-Urban Interface: An Examination of the Effects of Wildfire on Residential Property Markets.
(2004-08-12) Huggett, Robert James Jr.; Subhrendu Pattanayak, Committee Member; Daniel Phaneuf, Committee Member; Russell Lamb, Committee Member; Raymond Palmquist, Committee Chair
Housing markets near forests and wildland should capitalize into prices the value of forest amenities such as recreational opportunities, attractive scenery, and clean air. The expanding wildland-urban interface has made wildfire a frequently discussed and contentious public policy issue over the past decade. As residential communities expand into natural areas, more lives and property are placed at risk of death and destruction from wildfire. Housing markets are impacted by both the mere presence of fire risk as well as the damage to forest amenities and property that accompanies a wildfire. The purpose of this research is to empirically identify these responses. A data set comprised of residential housing sales from 1992-1996 in Chelan County, Washington was used to determine how the market responded to the 1994 fires in the Wenatchee National Forest that burned over 180,000 acres. The results indicate a decrease in the willingness to pay to live near the burned area for a six-month period in early 1995. There is no change in the willingness to pay to live near areas of relatively higher fire risk defined by higher fuel levels, which can be interpreted as a lack of support for collective protective measures that would reduce fuels. Additionally, the hedonic price for a fire-resistant roof increases gradually for 18 months before dropping to pre-fire levels in the second half of 1996. This result indicates that the subjective or perceived risk of property damage from wildfire behaved in a similar fashion and suggests either a risk threshold below which the household disregards the risk of fire or a general lack of awareness of risk.
Spatial Aggregation and Prediction in the Hedonic Model
(2003-05-20) Fulcher, Charles Michael; Raymond Palmquist, Committee Chair; Michael Walden, Committee Member; Stephen Margolis, Committee Member; Walter Thurman, Committee Member
Using a data set of Wake County, North Carolina, property sales for the period 1992-2000, this study provides evidence as to the acceptability of spatial aggregation in hedonic property value models. Both statistical tests and tests based upon prediction errors are performed in order to identify the circumstances under which aggregation is statistically acceptable or acceptable from a practical standpoint. This study makes extensive use of spatial econometric techniques in order to control for the spatial correlation problems which exist in models where location matters, and discusses the importance of specification and functional form as determinants of both the acceptability of aggregation and predictive power. Since multiple specifications and types of models are estimated, this study also provides guidance as to the type of model or specification providing the best performance when used to estimate hedonic property value models. The primary finding of this study is that while statistical tests typically reject aggregation, the effects of aggregation upon prediction errors is negligible. We would typically expect less than a 2000 dollar increase in mean absolute prediction error from aggregating the entire county, while in several cases the out-of-sample predictions would be improved. Further, in many cases aggregation yields more plausible coefficient values, especially for less important determinants of property values. These results may indicate that aggregation is preferable to extensive disaggregation when conducting hedonic property values studies, especially if one is concerned with the coefficient estimates. I also find that a spatial error model is typically preferred over OLS and Box-Cox alternatives, even when those alternatives include additional variables describing the locational characteristics of the properties and the spatial error model does not.