HEDONIC PRICES AND ENVIRONMENTAL CLASSIFICATION OFECONOMIC VALUES OF SELECTED AREAS OF TABRIZ

• Main Author: Dr. Ali Mohammad Khorshiddoust
• Format: Article
• Language: English
• Published: Social Sciences Research Society 2013-07-01
• Series: International Journal of Economics and Finance Studies
• Online Access: http://www.sobiad.org/eJOURNALS/journal_IJEF/archieves/2013_2/Ali-Mohammad.pdf

Among the conventional models of valuing and economic pricing of theenvironmental amenities, hedonic pricing method (HPM) is based on thehypothesis that people usually determine their environmental consumptionpreference levels through choosing their houses. In this paper we applied thismethodology along with an analysis of housing prices in different zones of Tabriz,aiming at establishing a correlation between these factors and environmentalcharacteristics. The results can be generalized within the willingness to payprinciple of the consumers for buying a better house with regard to various factorsincluding the environmental variables. We adapted through a random systematicsampling procedure a survey of residents in various areas of Tabriz that beardifferent environmental conditions, being followed by statistical models. Findingsindicate that about 50% of the respondents seeking to buy houses were universitygraduated. The priority of environmental quality promotion in the questionnairewas the most imperative factor in selecting the house. The stepwise regressionanalysis results designated positive significant correlation in 95% confidence levelbetween the independent variables of environmental quality, green space, and theaccess to services, and dependent variable of house price. The null hypothesisthereby was rejected and the amount of r2 was 68%. Final conclusion is thatpeople "do" include the quality of environment in their choices of buying house orproperty and they allocate hidden prices to the environmental values andamenities for their purchase. This study showed that HPM can be a reliablemethod for appraisal and estimation of the effects of non-market environmentalgoods and services, on house prices and other amenities.