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

Abstract

Among the conventional models of valuing and economic pricing of the environmental amenities, hedonic pricing method (HPM) is based on the hypothesis that people usually determine their environmental consumption preference levels through choosing their houses. In this paper we applied this methodology along with an analysis of housing prices in different zones of Tabriz, aiming at establishing a correlation between these factors and environmental characteristics. The results can be generalized within the willingness to pay principle of the consumers for buying a better house with regard to various factors including the environmental variables. We adapted through a random systematic sampling procedure a survey of residents in various areas of Tabriz that bear different environmental conditions, being followed by statistical models. Findings indicate that about 50% of the respondents seeking to buy houses were university graduated. The priority of environmental quality promotion in the questionnaire was the most imperative factor in selecting the house. The stepwise regression analysis results designated positive significant correlation in 95% confidence level between the independent variables of environmental quality, green space, and the access to services, and dependent variable of house price. The null hypothesis thereby was rejected and the amount of r2 was 68%. Final conclusion is that people "do" include the quality of environment in their choices of buying house or property and they allocate hidden prices to the environmental values and amenities for their purchase. This study showed that HPM can be a reliable method for appraisal and estimation of the effects of non-market environmental goods and services, on house prices and other amenities.

Keywords

• Housing Prices, Tabriz, Environment, Pollution Level, Hedonic Pricing Method.