Pricing Coastal Amenities and Flood Hazards

Zhenshan Chen and Charles A. Towe

Article Figures & Data

  • Table 1

    Summary Statistics Original Sample

    VariableMean (SD)
    CTCG1CTCG2CTCG3MACG1aMACG2MACG3
    Housing price ($)625,980.30346,222.02368,298.016301,488.34575,629.36474,796.33
    (534,865.48)(244,518.71)(270,987.67)(200,161.84)(391,224.77)(263,422.31)
    Flood zone (SFHA)0.1150.0940.1260.0750.1110.098
    (0.319)(0.292)(0.332)(0.264)(0.314)(0.297)
    Ln (ocean view area [sq. ft.])0.4090.8761.3010.9090.5490.900
    (2.269)(3.386)(4.068)(3.377)(2.657)(3.419)
    Ln (ocean view angle)0.0560.1410.2030.1300.0740.136
    (0.400)(0.660)(0.799)(0.620)(0.466)(0.647)
    Ocean viewshed slice no.0.0960.2020.3290.3340.2130.344
    (0.891)(1.477)(1.721)(2.576)(2.648)(2.686)
    Ocean viewshed distance (ft.)5,167.1975,035.6944,906.2665,039.4605,138.0755,032.400
    (722.325)(1,041.586)(1,271.953)(1,008.281)(777.746)(1,032.181)
    Coast front0.0040.0150.019
    (0.064)(0.123)(0.137)
    River front0.0060.0040.017
    (0.075)(0.062)(0.129)
    Waterfront across street0.0020.0040.007
    (0.041)(0.063)(0.080)
    Building sq. ft. (living space)1,985.6921,701.5861,725.7691,669.7381,759.9581,807.735
    (1,067.370)(778.764)(785.382)(516.570)(603.861)(634.350)
    Lot sq. ft.18,750.65820,558.66130,499.81916,955.17823,313.37215,473.128
    (22,929.872)(31,212.687)(50,645.934)(53,425.323)(55,341.864)(26,889.447)
    Building age58.93259.06253.98966.90341.22765.608
    (30.157)(32.146)(33.479)(37.426)(29.776)(37.758)
    Ground elevation93.55569.07865.16422.47112.90719.478
    (68.233)(69.921)(58.312)(13.260)(8.975)(13.539)
    Total bedrooms3.2753.1403.1222.9543.0503.049
    (0.869)(0.845)(0.839)(0.855)(0.836)(0.961)
    Ln (distance to coastline [hundreds ft.])4.0343.6423.5763.5072.9203.133
    (0.990)(1.286)(1.332)(1.070)(1.023)(1.186)
    Ln (distance to nearest highway exit [miles])0.6180.7700.8990.8651.4581.116
    (0.252)(0.361)(0.362)(0.498)(0.721)(0.505)
    Ln (distance to nearest highway [hundreds ft.])2.5822.5112.6003.3463.4002.705
    (0.821)(0.904)(0.946)(1.216)(1.445)(1.036)
    Ln (distance to nearest airport [hundreds ft.])b5.3125.0175.0534.2944.8754.797
    (0.677)(0.802)(0.717)(0.671)(0.791)(0.743)
    N42,31432,25019,04215,54145,223130,389

    Note: CTCG / MACG = county groups; SFHA = special flood hazard area.

    • a The waterfront variables are not generated for Massachusetts.

    • b The airports here include small airports to approximate the disamenities from being close to an airport.

  • Table 2

    Panel Results: Full Models for Connecticut

    SampleaCTCG1 OLSCTCG1 MatchedCTCG2 OLSCTCG2 MatchedCTCG3 OLSCTCG3 Matched
    OutcomeLn(price)
    Flood zone (SFHA)−0.0142−0.0158−0.0208−0.0382***0.00925−0.00439
    (0.0152)(0.0100)(0.0137)(0.00907)(0.0196)(0.0200)
    Ln (ocean view area)0.00184−0.0001980.0005000.004310.00615*0.00996***
    (0.00279)(0.00194)(0.00268)(0.00350)(0.00261)(0.00264)
    Ln (ocean view angle)0.02410.0462*0.0336***0.0297**0.0233+0.0118
    (0.0228)(0.0208)(0.00813)(0.00885)(0.0132)(0.0121)
    Ocean viewshed slice no.−0.00947*−0.00841−0.00623**−0.00500*0.001510.000228
    (0.00441)(0.00600)(0.00189)(0.00200)(0.00365)(0.00393)
    Ln (ocean view distance)−0.0437***−0.0383**−0.0222*−0.01530.001950.0119
    (0.0110)(0.0130)(0.0108)(0.00920)(0.0128)(0.0130)
    Coast front0.136+0.1200.454***0.427***0.459***0.432***
    (0.0740)(0.0839)(0.0436)(0.0321)(0.0345)(0.0414)
    River front0.124*0.118*0.310***0.233**0.302***0.293***
    (0.0525)(0.0479)(0.0449)(0.0694)(0.0373)(0.0438)
    Waterfront across street0.191**0.170*0.282***0.240***0.254***0.250***
    (0.0679)(0.0653)(0.0328)(0.0419)(0.0427)(0.0532)
    Ln (distance to coastline)−0.0946***−0.107***−0.0222*−0.00586−0.0582***−0.0660**
    (0.0202)(0.0258)(0.0100)(0.0140)(0.0161)(0.0211)
    Month fixed effectsYesYesYesYesYesYes
    Year-quarter fixed effectsYesYesYesYesYesYes
    Census tract by yearYesYesYesYesYesYes
    R-squared0.9020.9010.8130.8490.7750.789
    Observations in SFHA4,8674,8673,0243,0242,3942,394
    Observations outside SFHA37,4473,04129,2262,26216,6481,553
    Observations42,3147,90832,2505,28619,0423,947

    Note: Standard errors are in parentheses. Robust standard errors clustered by census tract are reported. CTCG = county groups; SFHA = special flood hazard area.

    • a The matching process for “matched” required exact match on transaction year. In addition, this one-on-one-with-replacement matching requires exact matching on coastal proximity bands, neighborhood category, and mortgage status.

    • + p < 0.1;

    • * p < 0.05;

    • ** p < 0.01;

    • *** p < 0.001.

  • Table 3

    Panel Results: Simplified and Qualitative View Models for Connecticut

    SampleCTCG2 MatchedaCTCG2 MatchedCTCG1 MatchedCTCG2 MatchedCTCG3 Matched
    ModelSimplified (No Waterfront)ConvenientQualitative ViewQualitative ViewQualitative View
    OutcomeLn(price)
    Flood zone (SFHA)−0.0283*−0.0140−0.0161−0.0304*0.000424
    (0.0110)(0.0145)(0.00975)(0.0114)(0.0209)
    Ln (ocean view area)−0.00816*
    (0.00373)
    Ln (ocean view angle)0.0974***
    (0.00950)
    Ocean viewshed slice no.−0.00640**
    (0.00200)
    Ln (ocean view distance)−0.0502***
    (0.0137)
    Ocean view category 10.421***0.525***0.437***
    (0.0472)(0.0323)(0.0773)
    Ocean view category 20.365***0.409***0.393***
    (0.0366)(0.0277)(0.0504)
    Ocean view category 30.246***0.263***0.223***
    (0.0497)(0.0429)(0.0448)
    Ocean view category 40.0735***0.0773**0.0922***
    (0.0159)(0.0263)(0.0208)
    Ln (distance to coastline)−0.0397*−0.112***−0.138***−0.0473*−0.129***
    (0.0194)(0.0245)(0.0184)(0.0196)(0.0184)
    Month fixed effectsYesYesYesYesYes
    Year-quarter fixed effectsYesYesYesYesYes
    Census tract by yearYesYesYesYesYes
    R-squared0.8360.8050.9000.8330.769
    Observations in SFHA3,0243,0244,8673,0242,394
    Observations outside SFHA2,2622,3423,0412,2621,553
    Observations5,2865,3667,9085,2863,947

    Note: Standard errors are in parentheses. Robust standard errors clustered by census tract are reported. CTCG = county groups; SFHA = special flood hazard area.

    • a The matching process required exact match on transaction year. In addition, this one-on-one-with-replacement matching also requires exact matching on coastal proximity bands (three bands defined coastal proximity percentiles), neighborhood category, and mortgage status. Note that the matching process in the convenient models do not involve ocean view variables.

    • + p < 0.1;

    • * p < 0.05;

    • ** p < 0.01;

    • *** p < 0.001.

  • Table 4

    Panel Results: Simplified and Qualitative View Models for Massachusetts

    SampleaMACG1 MatchedMACG2 MatchedMACG3 MatchedMACG1 MatchedMACG2 MatchedMACG3 Matched
    ModelSimplifiedSimplifiedSimplifiedQualitative ViewQualitative ViewQualitative View
    OutcomeLn(price)
    Flood zone (SFHA)−0.0720**0.0455*−0.0115−0.0733**0.0428*−0.0143
    (0.0194)(0.0178)(0.0123)(0.0201)(0.0183)(0.0120)
    Ln (ocean view area)−0.00975*0.0103**−0.00440**
    (0.00376)(0.00361)(0.00132)
    Ln (ocean view angle)0.0503*0.02940.0596***
    (0.0190)(0.0187)(0.00923)
    Ocean viewshed slice no.0.001420.00203***0.000564
    (0.00120)(0.000579)(0.000730)
    Ln (ocean view distance)−0.0504**−0.0354**−0.0290***
    (0.0153)(0.0120)(0.00707)
    Ocean view category 10.288**0.444***0.373***
    (0.0864)(0.0667)(0.0468)
    Ocean view category 20.179*0.398***0.260***
    (0.0652)(0.0466)(0.0321)
    Ocean view category 30.0715**0.428***0.185***
    (0.0219)(0.0830)(0.0323)
    Ocean view category 40.0348*0.197***0.0505***
    (0.0165)(0.0273)(0.0127)
    Ln (distance to coastline)−0.170***−0.221***−0.106***−0.186***−0.227***−0.115***
    (0.0300)(0.0171)(0.0116)(0.0250)(0.0175)(0.0118)
    Month fixed effectsYesYesYesYesYesYes
    Year-quarter fixed effectsYesYesYesYesYesYes
    Census tract by yearYesYesYesYesYesYes
    R-squared0.7980.7620.7770.7960.7590.775
    Observations in SFHA1,1695,02012,7301,1695,02012,730
    Observations outside SFHA8523,7008,8158523,7008,815
    Observations2,0218,72021,5452,0218,72021,545

    Note: Standard errors are in parentheses. Robust standard errors clustered by census tract are reported. MACG = county groups; SFHA = special flood hazard area.

    • a The matching process for “matched” required exact match on transaction year. In addition, this one-on-one-with-replacement matching also requires exact matching on coastal proximity bands, neighborhood category, and mortgage status.

    • + p < 0.1;

    • * p < 0.05;

    • ** p < 0.01;

    • *** p < 0.001.

  • Table 5

    Average Estimates of Flood Zone Discounts and Coastal Amenity Premiums for Coastal Towns in Connecticut and Massachusetts

    CTCG1CTCG2CTCG3MACG1MACG2MACG3
    CountiesFairfieldNew HavenNew London MiddlesexBristolDukes Nantucket BarnstableSuffolk Plymouth Norfolk Essex
    Flood zone (SFHA)a(−1.60%)b−2.99%(0.04%)−7.07%(4.37%)−1.42%
    [−0.0346,[−0.0514,[−0.0397,[−0.1066,[0.0070,[−0.0371,
    0.0030]−0.0080]0.0423]−0.0333]0.0818]0.0093]
    Ocean view category 152.35%69.05%54.81%33.38%55.89%45.21%
    [0.3889,[0.5868,[0.3304,[0.1260,[0.3679,[0.3248,
    0.6711]0.8009]0.8013]0.5799]0.7767]0.5916]
    Ocean view category 244.05%50.53%48.14%19.60%48.88%29.69%
    [0.3408,[0.4258,[0.3421,[0.0525,[0.3589,[0.2178,
    0.5476]0.5893]0.6352]0.3591]0.6312]0.3811]
    Ocean view category 327.89%30.08%24.98%7.41%53.42%20.32%
    [0.1602,[0.1959,[0.1448,[0.0290,[0.3038,[0.1294,
    0.4097]0.4149]0.3645]0.1212]0.8052]0.2819]
    Ocean view category 47.63%8.04%9.66%3.54%21.77%5.18%
    [0.0432,[0.0261,[0.0528,[0.0025,[0.1543,[0.0259,
    0.1103]0.1375]0.1422]0.0694]0.2847]0.0783]
    Single-family residence price average (2017$)625,980346,222368,298301,488575,629474,796

    Note: CTCG / MACG = county groups; SFHA = special flood hazard area.

    • a Mean price percentage differences (attribute level 1 vs. level 0, holding all other attributes constant and with level 0 price as the base) are reported as well as the 95% confidence intervals (in square brackets). To give a better idea of how much dollar values are associated, the average coastal property prices of the corresponding region is reported.

    • a The flood zone discounts in parentheses suggest that these discounts are not supported by high-confidence statistical results due to power issues or alternative explanations, so any interpretation of these numbers should use caution.