Valuing access to urban greenspace using non-linear distance decay in hedonic property pricing

Abstract

Modelling walking distance enables the observation of non-linearities in hedonic property pricing of accessibility to greenspace. We test a penalized spline spatial error model (PS-SEM), which has two distinctive features. First, the PS-SEM controls for the presence of a spatially autocorrelated error term. Second, the PS-SEM allows for continuous non-linear distance decay of the property price premium as a function of walking distance to greenspaces. As a result, compared with traditional spatial econometric methods, the PS-SEM has the advantage that data determines the functional form of the distance decay of the implicit price for greenspace accessibility. Our PS-SEM results from Oslo, Norway, suggest that the implicit price for greenspace access is highly non-linear in walking distance, with the functional form varying for different types of greenspaces. Our results caution against using simple linear distances and assumptions of log or stepwise buffer-based distance decay in property prices relative to pedestrian network distance to urban amenities. The observed heterogeneity in the implicit property prices for walking distance to greenspace also provides a general caution against using non-spatial hedonic pricing models when aggregating values of greenspace amenities for policy analysis or urban ecosystem accounting purposes. Penalized spline spatial error model (PS-SEM) Hedonic pricing method (HPM) Urban ecosystem services valuation Urban ecosystem accounting Urban planning Environmental justice