Valuation of Olympic Park and Boramae Park by using Hedonic Price Method

Abstract

The ecosystem provides individuals with a variety of benefits. Parks in particular provide a number of benefits, including recreational, leisure, and educational opportunities. Generally speaking, people are well aware of the value of the benefits that urban parks offer. This study estimates, through the use of hedonic price methods (HPM), the populaces willingness to pay (WTP) for Olympic Park and Boramae Park in Seoul, South Korea. HPM constitute one type of valuation method for nonmarket goods. All else being equal, individuals generally prefer to live in a house located near a park

this preference is seen in the prices of apartment rentals and real estate. It makes sense, then, that this study would use an HPM model. The dataset used comprises real transaction prices from Sungnae-dong and Sindaebang-dong in 2012, and four function types are used. Variables were chosen after undertaking a literature review and expert interviews. The independent variables include square area of a household, the age of the building (i.e., year of completion), the floor of a household within a building, the number of households in an apartment complex, the distance to the nearest entrance of an elementary school, the distance to the nearest subway station, the distance to the nearest bus stop, whether or not there is a park view from a household, and the distance to the nearest park entrance. The results of regression analyses were as follows. When someone who lives in Sungnae-dong buys a house, the households WTP to be 1 m closer to Olympic Park is equal to 1% of the unit price. At the same time, this factor can be considered to have a monetary value: about 1,000 won (KRW) per 1 m closer in the log function regression, and about KRW 2,000 in the linear regression. For Boramae Park, residents who live in Sindaebang-dong assign a WTP value that equals 2% of the unit price of a home

that monetary value is about KRW 2,000 by log function regression and about KRW 3,500 by linear regression. The price of an apartment that has a view of Boramae Park can be as much as 9.5% higher than one that does not. In addition, this study determines mathematically the range of influence of park proximity on an apartments value. The value of is 212.42 m (semi-log function of Olympic Park), 337.17 m (log function of Olympic Park), 578.23 m (semi-log function of Boramae Park), and 900.35 m (log function of Boramae Park). These results indicate that the range of influence of Boramae Park is larger than that of Olympic Park. The monetary value of living within the vicinity of one of these two parks is not of significant size. The value is set by the users, and so the value of the park relates to accessibility. The study results indicate that Boramae Park is more valuable to those that live in its vicinity than Olympic Park is for its residents. The number of studies that work to quantify ecosystems and their valuations has been increasing worldwide in recent years, largely because the results of quantification and valuation are useful in creating policy that protects or preserves the ecosystem, and in creating parks. This study is about park, ecosystem, and ecosystem services valuation, and about the allocation of greenspace

it makes a significant contribution to the literature, in that its results bear implications with regard to the estimated value of these parks. These figures also allow for comparisons of the value ranges of the two parks.