Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2024-12-05
Number: 24-073/VIII
Author-Name: Yashvant R Premchand
Author-Workplace-Name: Vrije Universiteit Amsterdam and TNO
Author-Name: Henri L.F. de Groot
Author-Workplace-Name: Vrije Universiteit Amsterdam and Tinbergen Institute
Author-Name: Thomas de Graaff
Author-Workplace-Name: Vrije Universiteit Amsterdam and Tinbergen Institute
Author-Name: Eric Koomen
Author-Workplace-Name: Vrije Universiteit Amsterdam and Tinbergen Institute
Title: Land subsidence, Water management, House prices, Hedonic pricing, Climate adaptation
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. 
Classification-JEL: Q54, R11, R14, R21, R31
Keywords: Land subsidence, Water management, House prices, Hedonic pricing, Climate adaptation
File-URL: https://papers.tinbergen.nl/24073.pdf
File-Format: application/pdf
File-Size: 960.495 bytes
Handle: RePEc:tin:wpaper:20240073