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Land subsidence, Water management, House prices, Hedonic pricing, Climate adaptation

Author

Listed:
  • Yashvant R Premchand

    (Vrije Universiteit Amsterdam and TNO)

  • Henri L.F. de Groot

    (Vrije Universiteit Amsterdam and Tinbergen Institute)

  • Thomas de Graaff

    (Vrije Universiteit Amsterdam and Tinbergen Institute)

  • Eric Koomen

    (Vrije Universiteit Amsterdam and Tinbergen Institute)

Abstract

Land subsidence which is primarily driven by water management practices and enhanced by increasing droughts is a growing global concern that affects the environment, infrastructure, and housing. In the Netherlands, subsidence damages houses and their foundations, resulting in high costs of repair for homeowners. However, public awareness remains limited about individual vulnerability and financial impact. This study aims to identify the link between land subsidence and house prices. Using over 100,000 housing transactions from 2000–2022 and detailed subsidence data, we find an average price discount of 2.3–5.0% for houses exposed to land subsidence, with larger effects for houses constructed before 1970 for which foundation damage is more prominent. Our findings suggest that, even with limited information and low societal urgency, homebuyers do consider the potential damage of land subsidence in expressing their willingness to pay for a house, especially after recent droughts.

Suggested Citation

  • Yashvant R Premchand & Henri L.F. de Groot & Thomas de Graaff & Eric Koomen, 2024. "Land subsidence, Water management, House prices, Hedonic pricing, Climate adaptation," Tinbergen Institute Discussion Papers 24-073/VIII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20240073
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    File URL: https://papers.tinbergen.nl/24073.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Land subsidence; Water management; House prices; Hedonic pricing; Climate adaptation;
    All these keywords.

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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