Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities

This paper uses a hedonic property price function to estimate the relationship between flood risk and rents in four Sub-Saharan Africa cities: Accra, Antananarivo, Dar es Salaam, and Addis Ababa. The analysis relies on household survey data collect...

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Main Authors: Erman, Alvina, Dallmann, Ingrid
Format: Working Paper
Language:English
Published: World Bank, Washington, DC 2022
Subjects:
Online Access:http://documents.worldbank.org/curated/en/099947307212239604/IDU0b6fb06980cadc0453908efb0daf3293b3149
http://hdl.handle.net/10986/37754
id okr-10986-37754
recordtype oai_dc
spelling okr-10986-377542022-08-19T13:56:02Z Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities Erman, Alvina Dallmann, Ingrid NATURAL DISASTERS DISASTER RISK MANAGEMENT HEDONIC REGRESSION POVERTY RESILIENCE URBAN HOUSING SUSTAINABLE CITIES URBANIZATION URBAN FLOODS ACCESS TO JOBS FLOOD RISK MANAGEMENT ACCRA ANTANANARIVO DAR ES SALAAM ADDIS ABABA HOUSING SECURITY RENT PRICES This paper uses a hedonic property price function to estimate the relationship between flood risk and rents in four Sub-Saharan Africa cities: Accra, Antananarivo, Dar es Salaam, and Addis Ababa. The analysis relies on household survey data collected after flood events in the cities. Flood risk is measured with self-reported data on past flood exposure and perception of future risk of flooding of households. The study finds that flood risk is associated with lower rents in Accra, Antananarivo, Dar es Salaam, and Addis Ababa, ranging from 14 to 56 percent lower. In contrast, risk is associated with higher rent in Dar es Salaam, which could be potentially attributed to a combination of lack of awareness of flood risk among renters, high transaction costs and omitted variable bias. For example, only 12 percent of households living in flood-prone areas were aware of the flood risk when they moved in. In Antananarivo, job density is associated with higher rents while in Accra and Addis Ababa, higher job density is associated with lower rents. Results are negative but not significant in Dar es Salaam. When interacting job density with flood risk for each city, the negative effect of job density on rents is higher (in absolute value) when flood risk is high in Accra and Addis Ababa, and the positive effect of job density on rents becomes negative when flood risk is high in Antananarivo. This relationship is not found in Dar es Salaam. The finding seems to suggest that access to jobs is an important factor driving people to settle in flood-prone areas. 2022-07-25T16:32:26Z 2022-07-25T16:32:26Z 2022-07 Working Paper http://documents.worldbank.org/curated/en/099947307212239604/IDU0b6fb06980cadc0453908efb0daf3293b3149 http://hdl.handle.net/10986/37754 English Policy Research Working Papers;10127 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Policy Research Working Paper Publications & Research Africa Africa Eastern and Southern (AFE) Africa Ethiopia Ghana Madagascar Tanzania
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building World Bank Open Knowledge Repository
collection World Bank
language English
topic NATURAL DISASTERS
DISASTER RISK MANAGEMENT
HEDONIC REGRESSION
POVERTY
RESILIENCE
URBAN HOUSING
SUSTAINABLE CITIES
URBANIZATION
URBAN FLOODS
ACCESS TO JOBS
FLOOD RISK MANAGEMENT
ACCRA
ANTANANARIVO
DAR ES SALAAM
ADDIS ABABA
HOUSING SECURITY
RENT PRICES
spellingShingle NATURAL DISASTERS
DISASTER RISK MANAGEMENT
HEDONIC REGRESSION
POVERTY
RESILIENCE
URBAN HOUSING
SUSTAINABLE CITIES
URBANIZATION
URBAN FLOODS
ACCESS TO JOBS
FLOOD RISK MANAGEMENT
ACCRA
ANTANANARIVO
DAR ES SALAAM
ADDIS ABABA
HOUSING SECURITY
RENT PRICES
Erman, Alvina
Dallmann, Ingrid
Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities
geographic_facet Africa
Africa Eastern and Southern (AFE)
Africa
Ethiopia
Ghana
Madagascar
Tanzania
relation Policy Research Working Papers;10127
description This paper uses a hedonic property price function to estimate the relationship between flood risk and rents in four Sub-Saharan Africa cities: Accra, Antananarivo, Dar es Salaam, and Addis Ababa. The analysis relies on household survey data collected after flood events in the cities. Flood risk is measured with self-reported data on past flood exposure and perception of future risk of flooding of households. The study finds that flood risk is associated with lower rents in Accra, Antananarivo, Dar es Salaam, and Addis Ababa, ranging from 14 to 56 percent lower. In contrast, risk is associated with higher rent in Dar es Salaam, which could be potentially attributed to a combination of lack of awareness of flood risk among renters, high transaction costs and omitted variable bias. For example, only 12 percent of households living in flood-prone areas were aware of the flood risk when they moved in. In Antananarivo, job density is associated with higher rents while in Accra and Addis Ababa, higher job density is associated with lower rents. Results are negative but not significant in Dar es Salaam. When interacting job density with flood risk for each city, the negative effect of job density on rents is higher (in absolute value) when flood risk is high in Accra and Addis Ababa, and the positive effect of job density on rents becomes negative when flood risk is high in Antananarivo. This relationship is not found in Dar es Salaam. The finding seems to suggest that access to jobs is an important factor driving people to settle in flood-prone areas.
format Working Paper
author Erman, Alvina
Dallmann, Ingrid
author_facet Erman, Alvina
Dallmann, Ingrid
author_sort Erman, Alvina
title Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities
title_short Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities
title_full Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities
title_fullStr Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities
title_full_unstemmed Putting a Price on Safety : A Hedonic Price Approach to Flood Risk in African Cities
title_sort putting a price on safety : a hedonic price approach to flood risk in african cities
publisher World Bank, Washington, DC
publishDate 2022
url http://documents.worldbank.org/curated/en/099947307212239604/IDU0b6fb06980cadc0453908efb0daf3293b3149
http://hdl.handle.net/10986/37754
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