Économie et Statistique n° 444-445 : Land and agriculture, recent developments
Impact of Coastal Development on Land Markets: Comparative Study of the Basque and Charente Coasts
Land markets are the focus of intense competition between different uses, chiefly agriculture versus residential. Coastal areas, which are experiencing robust growth and generate specific amenities, are particularly subject to such conflicts of use. Coastal amenities put pressure on land prices and thus help to modify the structure of local territory in a way that complements and/or substitutes for the central amenities that reflect the advantages of urban proximity. We study the influence of coastal amenities on price formation by identifying the variation in land values as a function of distance from the coast. For this purpose, we compare two coastal areas of France: the still heavily agricultural Charente coast and the more urbanized Basque coast. This empirical comparison requires a common methodology. We apply the hedonic price method in a novel way by means of a semi-parametric estimation followed by a fragmented modelling, taking spatial dependence into account. We show that coastal development generates significant capital gains for residential properties along the coastal strip due to closeness to the shore and the presence of amenities. The phenomenon extends inland as a function of accessibility. Coastal development also disrupts farmland markets, including in the hinterland. The comparison of the two areas of study suggests that local characteristics are responsible for major differences in the impact of coastal development: on the Basque coast, the amenities tend to be residential, while on the Charente coast they are prevalently agricultural.