Measuring the Economic Impact of Green Space
Sep 15, 2010
For a systems project sponsored by the Urban Redevelopment Authority of Pittsburgh, a team of students from Carnegie Mellon University's H. John Heinz II College used geographic information systems (GIS) and regression techniques to uncover a green premium for home prices near city parks. With the help of advisor Christopher Paul of Rand Pittsburgh, students used GIS and statistical regression to examine information on parks, housing characteristics, home sales, and other community level data and build a hedonic pricing model to assess the relationship between sales price and park proximity.
Their model points to substantial statistically significant effects for some homes, and suggest that properties within 2,000 feet of a large park exhibit an average “green premium” of up to $40,000, diminishing beyond this range. The students also investigated and assessed the feasibility of using a number of different techniques for assessing other possible types of economic impacts from green space, including savings from storm water management, tourism spending, and health effects.
"It’s great that we found statistically significant results for housing premiums near large parks, but more work needs to be done on small parks, where our results were inconclusive,” says Nelson Cheung, who worked on the Green Spaces project. Cheung also noted that developing a standardized classification system for local parks and their amenities would help future research
The project was the organized by Heinz College’s Center for Economic Development, which recently partnered with key regional organizations in economic development to facilitate such learning opportunities for students.
"The city of Pittsburgh faces both challenges and opportunities with respect to vacant and blighted land and a shrinking population. Local policy makers are looking for answers to neglected and abandoned properties, and a wave of green strategies has emerged in response," notes Greg Lagana, the Center’s project director. “What hasn’t evolved as rapidly is a framework that policymakers can use to evaluate and apply these strategies. This new report represents an important building block for such a framework. It suggests that large parks have impact on home values even after a large number of other factors are taken into account. That has implications for land use, and the future of the park system.”
For the last several years, Heinz students have been producing useful information and tools for decision makers and communities on the issue of vacant land. For example, last year a group of students created a decision tool for applying green strategies to vacant lots at the community level for a systems project sponsored by GTECH strategies. GTECH itself spun off from a ground breaking series of reports on addressing the vacant lot issue back in 2006.
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