The value of the greenbelt in Vienna: a spatial hedonic analysis

This paper employs the hedonic price method to examine whether the implicit value of the greenbelt is capitalized into apartment prices in the city of Vienna, Austria. We improve the traditional model using spatial econometric techniques and compare the estimates from different spatial models, namely the spatial lag model, the spatial error model, and the spatial Durbin model (SDM). While our use of spatial models addresses the common problem of omitted variable bias, the SDM specifically allows for controlling possible nearby proximity effects (i.e., small-scale neighborhood) that are rarely included in this type of analyses. Findings indicate that distance from the greenbelt is important in explaining apartment prices in Vienna and that the greenbelt exerts a centrifugal force. The SDM is found to be the best performing model indicating the existence of small-scale neighborhood effects and presenting a solid case for the consideration of this model in valuation of green amenities.