Conference Agenda

Land subsidence is a slow-moving environmental problem with potentially large long-run economic consequences. Although governments have implemented a range of mitigation strategies and policy instruments, economic evidence on the value of subsidence mitigation remains limited. This paper contributes to the literature by examining whether and how subsidence mitigation is capitalized into property values. I exploit the commissioning of the Hushan Reservoir as a quasi-experiment and combine geocoded property transaction data with spatially detailed subsidence measures from 2014–2020. I compare changes in the price–subsidence gradient in Yunlin County relative to adjacent control counties before and after the reservoir’s commissioning. The results show that improvements in subsidence conditions following the reservoir’s commissioning are significantly capitalized into land prices but not building prices. This pattern is consistent with land values more readily reflecting expectations of persistent improvements in long-run site conditions. Specifically, a one-centimeter reduction in cumulative subsidence over the two years preceding a transaction increases land prices by approximately 6%. The estimated effect is larger in townships with higher education and income levels.