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What is a Tree Worth? Green-City Strategies, Signaling and Housing Prices

27 Pages Posted: 8 May 2008  

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ; University of Pennsylvania - Finance Department

Grace Wong Bucchianeri

University of Pennsylvania - Real Estate Department

Abstract

We investigate the correlation between curbside tree plantings and housing price movements in Philadelphia from 1998 to 2003, comparing two programs, one by the Philadelphia Horticultural Society (PHS) that requires block-group effort that focuses on low-income neighborhoods and the other by the Fairmount Park Commission that is individual-based without specific target areas. A 7 to 11% price differential is identified within 4,000 feet of the Fairmount tree plantings. We argue that this is largely driven by either social capital creation or a signaling mechanism, on top of an intrinsic tree value (around 2%). Findings using the PHS tree program suggest that development of social capital or environmentally conscious behavior might be a less important channel. Any positive changes brought by the PHS tree plantings were not detected with sufficient statistical power.

Suggested Citation

Wachter, Susan M. and Bucchianeri, Grace Wong, What is a Tree Worth? Green-City Strategies, Signaling and Housing Prices. Real Estate Economics, Vol. 36, No. 2, pp. 213-239, Summer 2008. Available at SSRN: https://ssrn.com/abstract=1127944 or http://dx.doi.org/10.1111/j.1540-6229.2008.00212.x

Susan M. Wachter

University of Pennsylvania - Wharton School, Department of Real Estate ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104-6330
United States
215-898-6355 (Phone)

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

University of Pennsylvania - Finance Department ( email )

The Wharton School
3620 Locust Walk
Philadelphia, PA 19104
United States

HOME PAGE: http://real.wharton.upenn.edu/~wachter/index.html

Grace Wong Bucchianeri (Contact Author)

University of Pennsylvania - Real Estate Department ( email )

Philadelphia, PA 19104-6330
United States

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