The Value of Environmental Amenities in The Urban Housing Market in Bangladesh

The rapid pace of urbanization in Bangladesh has placed significant pressure on the abiotic environmental parameters within residential blocks, posing a major challenge for city corporation authorities. Environmental degradation, often a byproduct of urban expansion, can have a detrimental impact on property values in the housing market. Despite the importance of understanding the economic value of environmental amenities and dis-amenities, studies assessing these factors in the context of Bangladesh’s housing market are limited. This study aims to fill this gap by examining the economic value of environmental (dis)amenities in the housing market of Khulna city, Bangladesh. Utilizing the hedonic pricing method, the study evaluates the impact of four key environmental attributes—ventilation, open space, waterlogging, and landfill by waste—on house rents. The findings reveal that these environmental attributes significantly influence rental prices, with environmental amenities such as proximity to open space and good ventilation acting as rent boosters, while dis-amenities like waterlogging and landfill by waste lead to rent reductions.

Environmental amenities play a crucial role in determining the desirability and value of residential properties. In urban areas, access to open spaces, such as parks and green areas, is highly valued by residents. These spaces provide recreational opportunities, contribute to mental well-being, and enhance the overall quality of life. The study found that a hundred-meter reduction in proximity to open space leads to a 2 percent increase in rent. This suggests that residents are willing to pay a premium for properties located closer to open spaces, highlighting the importance of preserving and developing such amenities in urban planning.

Good ventilation is another key environmental amenity that significantly affects property value. In densely populated urban areas, adequate ventilation can improve indoor air quality, reduce the risk of respiratory issues, and enhance overall living conditions. The study revealed that a one discrete unit increase in a 5-point ventilation improvement scale from very poor to excellent results in a 5.4 percent increase in rent. This indicates that properties with better ventilation are highly sought after by renters, and improving ventilation systems can be a valuable investment for property owners.

While environmental amenities enhance property value, dis-amenities such as waterlogging and landfills by waste have the opposite effect. Waterlogging, a common issue in many urban areas of Bangladesh, can lead to flooding, damage to property, and health hazards. The study found that a one-unit increase in the 5-point degradation scale for waterlogging reduces house rents by 3.7 percent. Similarly, landfill by waste, which can lead to pollution and unpleasant odours, reduces house rents by 9.8 percent for a one-unit increase in the degradation scale. These findings underscore the need for effective waste management and drainage systems to mitigate the negative impacts of these dis-amenities on property values.

The study further analyzed the sensitivity of rental prices to environmental attributes in both planned and unplanned residential areas. It was found that the rental price of planned residential areas is more sensitive to ventilation and landfilling, while that of unplanned areas is more sensitive to both environmental dis-amenities—waterlogging and landfilling. This suggests that urban planning and development strategies should consider the specific sensitivities of different types of residential areas to environmental attributes in order to maximize property values and promote sustainable urbanization.

To provide a comprehensive understanding of the economic value of environmental (dis)amenities, the study computed the implicit price of these attributes in the housing markets of Khulna city. The implicit price represents the additional amount that renters are willing to pay for properties with better environmental conditions. By quantifying the value of environmental amenities and dis-amenities, the study provides valuable insights for policymakers, urban planners, and property developers. Improving environmental quality not only boosts house rents but also attracts environment-friendly urbanization, contributing to sustainable development.

In conclusion, the study highlights the significant impact of environmental amenities and dis-amenities on the housing market in Khulna City, Bangladesh. Environmental amenities such as proximity to open space and good ventilation are found to increase property rents, while dis-amenities like waterlogging and landfills by waste lead to rent reductions. The findings emphasize the importance of incorporating environmental considerations into urban planning and development strategies to enhance property values and promote sustainable urbanization. By improving environmental quality, cities can attract more residents and foster a higher quality of life for their inhabitants.

For further reading and research on this topic, the following external links provide additional insights and data on urban environmental amenities and their impact on housing markets: