Filippova, O; Xiao, Y; Rehm, M and Ingham, J (2018) Economic effects of regulating the seismic strengthening of older buildings. Building Research & Information, 46(7), pp. 711-724. ISSN 0961-3218
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.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | commercial property; disaster mitigation; earthquake; economic impacts; New Zealand; public policy; regulation; resilience; risk mitigation; stigma |
| Index terms: | evidence, strengthening, regulation, mitigation, economic impact, commercial building, commercial property, retrofitting, public policy, risk mitigation, retail building, disaster risk, property value, building stock, disaster mitigation, built environment, earthquake, New Zealand, national policy, office building, owner |
| Subjects: | real estate economics, public policy, construction type, evaluation and assessment methods, financial analysis, political science, environmental hazards, infrastructure and transport systems, sociology, asset management, financial risk, Geography, structural engineering, renovation and retrofit |
| Topics: | Geographical Context, Research Practice, Engineering Principles, Business Strategy, Cost Management, Construction Technology, Governance, Sustainability, Stakeholder Management, Urban Studies |
| Descriptive scope: | 3 PCA |
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