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Research Seminars & Workshops @ IRES


Associate Professor Tsuriel Somerville
UBC Centre for Urban Economics and Real Estate

Fear and Loathing of Oil Pipelines: Estimating Disamenity Effects


Date:

04 Feb 2015 (Wed)

Time:

3.00 - 4.30pm

Venue:

TLIAP Learning Centre 21 Heng Mui Keng Terrace, I3 Building, Level 4


Abstract

The increase in oil production in North America has led to proposals to expand pipeline capacity to move oil from Alberta and North Dakota to refineries and ports elsewhere on the continent. Opposition to these proposals has been intense, mixing concerns about climate change, environmental damage, and local opposition to the actual presence of pipelines. This paper studies the disamenity affects associated with the last factor. The contribution of the paper lies in the use of GIS techniques to develop measures of distance that reflect the flow of information rather than physical distance. As well, we take advantage of two events to augment more standard hedonic analysis with quasi-natural experimental difference in difference estimation. The limited existing literature exists has rarely found effects of pipeline proximity. In contrast, we find the presence of a pipeline easement lowers their market value by 6.5 to 7.0 percent. Single-family detached properties within 100 meters of an easement have market values that are 1.5 to 2.0 percent lower than those more distant. Beyond 100meters there is no discernible effect. However, distance appears to be less important that adjacency. Compared with other properties, those single family units adjacent to the pipeline easement have a 2.5 percent lower value, those one further property further away have a 2.1 percent lower value, and beyond this there is no effect of pipeline proximity on property values. These findings are robust and consistent across a variety of different specifications, where we examine the type of land use that has an easement, and whether some major land use lies between a property and the pipeline. The difference in difference approach also finds limited negative amenity effects for nearby properties.

About the Speaker

Dr. Tsur Somerville is an associate professor, Director of the UBC Centre for Urban Economics and Real Estate, and holder of the Real Estate Foundation Professorship in Real Estate Finance at the Sauder School of Business at UBC. His primary areas of research are housing markets, Canadian mortgage markets, and real estate development. He has published in all of the leading journals in urban economics and real estate and served on the boards of the top academic organizations and on multiple academic journal editorial boards in these fields. In addition to his academic research, Dr. Somerville is a frequent commentator in the local and national media on housing markets. Dr. Somerville received his Ph.D. in Economics from Harvard University and his BA from the Hebrew University (Israel) in Economics and East Asian Studies and has been at UBC since 1993.

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