The Application of Hedonic Pricing Method in Estimating the Hidden Economic Value of Environment: The Case Study of Correlation between Public Services, Pollution, and the Housing Prices in Selected Areas of Tabriz



The economic and market value of environmental goods and services are hidden. Among the conventional methods of valuing and economic pricing the environmental amenities, one is hedonic pricing method (HPM) which in terms of economic point of view is based on the hypothesis that people usually determine their environmental consumption preference levels through choosing their houses. Therefore, in decision making to buy a house there is a latent market in which the environmental quality is measured indirectly by consumers or buyers. The demand rates for such an environmental amenity are reflected in the presence or lack of air noise pollution in the area. HPM uses quantitative, statistical, and other methods to estimate the economic value of places and houses in environmental aspects. In this paper the author has applied this methodology along with an analysis of housing prices in different zones of Tabriz, aiming at establishing a correlation between these factors and environmental characteristics. The results can be generalized within the willingness to pay principle of the consumers for buying a better house with regard to various factors including the environmental variables.