The effects on real estate development of shore-protection efforts that lower erosion rates and storm hazards are both controversial and difficult to detect. A simple theoretical model indicates that shore protection is likely to “tilt” development from areas a few hundred feet inland toward beachfront property. A modified repeat-sale house price index is used to measure price appreciation rates to the water’s edge. We are able to formulate an extremely sensitive empirical test for a tilt in rates of house-price appreciation implied by a tilt in development. Surprisingly, we find no significant evidence that shore-protection efforts have produced additional beachfront development in the Florida counties studied. The method used in this article is quite general and could be used in a number of applications where an environmental effect impacts real estate differentially over space.
The Journal of Real Estate Finance and Economics – Springer Journals
Published: Oct 3, 2004
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