Opportunities for Self-Financing Flood Resilience Infrastructures in Boston, Massachusetts
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2023-09-28
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en
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Financing adaptations to climate change in the form of flood resilience infrastructures (FRIs), present financial challenges for local governments (Doeffinger & Rubinyi, 2023). Earlier studies have found that flood risk negatively affects housing prices (Bin & Landry, 2013). By reducing flood risk, housing prices are expected to increase because future damages are (expected to be) avoided (Kim, 2020). This research aims to provide a basis for arguing that FRIs can be (partially) self-financing through land value capture (LVC). If FRI implementation yields increases in sales prices, these increases could be captured to get a return on investments; much like in a virtuous circle (Lord et al., 2019). Through a hedonic price model with a difference-in-differences analysis, the effect of FRI construction is estimated. The model looks at sale transactions, with each sale being linked to its nearest FRI. A distinction is made between pre and post completion sales. The results show that there is a negative relationship between the distance to the nearest completed FRI project and the sale price per sf. On average, FRI projects increased post group sale prices by 2,7%. These findings are in line with earlier accounts (Kelly & Molina, 2023). Based on these results, Boston might consider to start implementing LVC instruments to capture these price increases.
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Faculteit der Managementwetenschappen