Do Open Sewers Lead to a Reduction in Housing Prices? Evidence from Rawalpindi, Pakistan ,Working Paper No. 78 - 13

Working Papers » Do Open Sewers Lead to a Reduction in Housing Prices? Evidence from Rawalpindi, Pakistan

By : Muhammad Irfan

In this study, we use the Hedonic property value method to estimate how a disamenity, bad odor from an open sewer system, affects housing prices in the city of Rawalpindi in Pakistan. We provide estimates of the benefits of converting the open system into a closed sewer system. We find that house rents decrease by approximately 10% if there is an open sewer (nali) by the house. House rents also increase for homes located further away from the main open drain (Nala Lai) - e.g. a house located 400 meters away from the main open drain enjoys a 12 percent increase in rent because of its distance. Sewer smell has a depressing effect on rent in those areas where smell remains constant throughout the day. The results suggest that residents are willing to pay to be away from bad odor emanating from the open sewerage system. City planners need to take this into account and consider installing sewerage pipes in open sewer areas, which would change the nature of Nala Lai from a disamenity to an amenity.

Keywords :Disamenity values; Open sewer; Hedonic prices; Rent; Willingness-to-pay; Pakistan.

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