Effect of Environmental Disamenities on Property Value: A Hedonic Approach

Abstract

Environment or natural environment can be defined as biological, chemical and physical surrounding upon which living organism depend for their basic survival and existence. Economy which is one of the major concerns of modern ages depends upon natural environment in three distinctive ways, first environment provides both renewable and non-renewable raw material which is used as an input for different production processes, second natural environment provides a function of natural depository for the waste generated by humans through production and consumption processes third it provides the function of natural beauty and environmental amenities. The production processes on one hand is beneficial for the economy in a way that goods and services can be produced by firms for profit motives which engages a large number of  people from different income groups be it an entrepreneur or a worker. This production processes on the other hand produces pollution as a by-product which has adverse effects on the environment. . These adverse effects can be seen in the form of environmental disamenities which are air pollution, water pollution, ozone depletion by toxic gases and most important of all global warming which is one of the major issues of modern time. This study is based on the hedonic property model with an assumption that environmental disamenities affect property price negatively. Hedonic model is used to analyse the effects of environmental disamenities on the property value of ground floor of houses in Peshawar Pakistan. The study indicates that if there is a presence of an environmental disamenties in an area it leads to adverse effects on the properties of the associated areas. The government authorities need to focus on such issues and design such developmental policies which are beneficial for the consumers living in such area which are affected by environmental disamenities.

Keywords: Environment, Renewable, Non-renewable, Amenities. Disamenities, Hedonic, Peshawar.