An opportunity cost approach to valuation of the river in a city center retail environment: another application of the Kaiyu Markov model. (English) Zbl 1533.91386
Saito, Saburo (ed.) et al., Recent advances in modeling and forecasting Kaiyu. Tools for predicting and verifying the effects of urban revitalization policy. Singapore: Springer. New Front. Reg. Sci., Asian Perspect. 36, 521-552 (2023).
Summary: Many cities in Japan face the decline of the city center commercial district due to motorization and locations of large shopping centers in suburban areas. This problem aroused the awareness that the loss of the city center commercial district means the loss of the prerequisite of subsistence of the city. Thus, many cities have launched redevelopment projects to revitalize their city center commercial districts. We have already proposed an evaluative framework for assessing the spatial structure of the city center commercial district based on consumers’ shop-around or Kaiyu behaviors. Furthermore, we constructed a frequency-based shop-around Markov model to forecast how redevelopment projects in a city center commercial district would change consumers’ shop-around or Kaiyu behaviors and consequently result in changes in retail sales of the city center commercial district.
On the other hand, evaluating public projects in terms of money has recently attracted severe concerns, those as harnessing exploding budgets for public investments and the consciousness of the environmental consequences of public projects. Thus, much discussion has been made on valuation methods of environmental resources such as CVM (contingent valuation method), travel cost method, user benefit method, and hedonic approach.
While the city center revitalization projects often accompany the improvement of natural environments such as parks and rivers, few studies have tried to evaluate them in terms of money. This study uses the above Kaiyu Markov model to evaluate the natural environment, such as the river in the city center district. More specifically, this study proposes an opportunity cost method for the valuation of natural resources in a city center district based on consumers’ shop-around or Kaiyu behaviors while applying to the Murasaki River in the city center commercial district of Kitakyushu City, Japan.
In the city center commercial district of Kitakyushu City, the Murasaki River flows from south to north, dividing the city center commercial district into east and west. The existence of the Murasaki River decreases consumers’ shop-arounds or Kaiyu movements between east and west so that retail turnover on each side decreases. Using the above model, we have estimated the total annual amount of the decrease in retail turnovers, which is the loss of retail sales that would have been obtained if it were not for the Murasaki River, which is the opportunity cost retailers are paying annually. To change the viewpoint, this can be regarded as willingness-to-pay that retailers are willing to spend every year for leaving the Murasaki River as it is. Hence if discounting, we can obtain the asset value of the Murasaki River. This study has done this.
For the entire collection see [Zbl 1531.91008].
On the other hand, evaluating public projects in terms of money has recently attracted severe concerns, those as harnessing exploding budgets for public investments and the consciousness of the environmental consequences of public projects. Thus, much discussion has been made on valuation methods of environmental resources such as CVM (contingent valuation method), travel cost method, user benefit method, and hedonic approach.
While the city center revitalization projects often accompany the improvement of natural environments such as parks and rivers, few studies have tried to evaluate them in terms of money. This study uses the above Kaiyu Markov model to evaluate the natural environment, such as the river in the city center district. More specifically, this study proposes an opportunity cost method for the valuation of natural resources in a city center district based on consumers’ shop-around or Kaiyu behaviors while applying to the Murasaki River in the city center commercial district of Kitakyushu City, Japan.
In the city center commercial district of Kitakyushu City, the Murasaki River flows from south to north, dividing the city center commercial district into east and west. The existence of the Murasaki River decreases consumers’ shop-arounds or Kaiyu movements between east and west so that retail turnover on each side decreases. Using the above model, we have estimated the total annual amount of the decrease in retail turnovers, which is the loss of retail sales that would have been obtained if it were not for the Murasaki River, which is the opportunity cost retailers are paying annually. To change the viewpoint, this can be regarded as willingness-to-pay that retailers are willing to spend every year for leaving the Murasaki River as it is. Hence if discounting, we can obtain the asset value of the Murasaki River. This study has done this.
For the entire collection see [Zbl 1531.91008].
MSC:
| 91D10 | Models of societies, social and urban evolution |
| 91B70 | Stochastic models in economics |
| 60J20 | Applications of Markov chains and discrete-time Markov processes on general state spaces (social mobility, learning theory, industrial processes, etc.) |
Keywords:
valuation; natural resources; asset value; opportunity cost; city center; commercial district; shop-around; Kaiyu; Markov model; Kitakyushu City; Murasaki River; KokuraReferences:
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