Economic effects of regulating the seismic strengthening of older buildings |
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Authors: | Olga Filippova Yu Xiao Michael Rehm Jason Ingham |
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Affiliation: | 1. Department of Property, University of Auckland, Auckland, New Zealand;2. Department of Landscape Architecture and Urban Planning, Hazard Reduction and Recovery Centre, Texas A&3. M University, College Station, TX, US;4. Department of Civil and Environmental Engineering, University of Auckland, Auckland, New Zealand |
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Abstract: | The marked increase in the awareness of earthquake risk following the Canterbury earthquakes in New Zealand offered a unique opportunity to investigate the economic effect of disaster-mitigation regulations on the commercial building stock. A difference-in-differences (DD) framework was used to determine whether earthquake risk has been capitalized into the property prices of buildings constructed prior to 1976, as a response to the national policy requiring assessment and strengthening (or demolition) of the existing earthquake-prone building stock. A negative externality is found in the policy announcement on affected (pre-1970s) office and retail buildings which caused office buildings to suffer a 12.5% stigma discount. However, retail properties were less impacted suffering a 2.3% stigma loss. The value of the commercial building stock has been affected by the policy. These findings provide policy-makers with timely evidence as to the economic effects of New Zealand’s earthquake-prone buildings policy. Facing losses in property value and financial responsibility for retrofitting their assets, building owners will be looking for a workable set of regulatory and non-regulatory incentives to encourage disaster risk management and protect the built environment. |
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Keywords: | commercial property disaster mitigation earthquake economic impacts public policy regulation resilience risk mitigation stigma New Zealand |
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