Value of cleaner neighborhoods: Application of hedonic price model in low income context

Peer Reviewed
30 June 2020

Mani Nepal, Rajesh K. Rai, Madan S. Khadayat, E. Somanathan

Municipal solid waste management is a challenging issue in developing countries. An unclean neighborhood could have a significant negative impact on housing property values too as it may lead to numerous diseases in addition to diminished aesthetic value. This study examines the effects of municipal solid waste collection services at the neighborhood level on housing property values using the hedonic price model. We use a sub-sample of nationally representative household survey data from urban areas as well as primary data collected from one of the metropolitan cities in Nepal. Our results suggest that city residents place a high price premium (between 25% and 57%) on cleaner neighborhoods and less (−11%) on open drains. These numbers indicate that better waste management will bring high returns to home owners, and also the municipality in cities where the tax base includes the assessed value of property.

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Nepal, M., Rai, R. K., Khadayat, M. S., & Somanathan, E. (2020). Value of cleaner neighborhoods: Application of hedonic price model in low income context. World Development, 131, 104965. doi:10.1016/j.worlddev.2020.104965
Publication | 22 July 2020