Date & time
Although many megacities in developing countries experience annual flooding that affects a large proportion of their residents, empirical studies evaluating the cost of floods in such cities have been lacking. As an attempt to fill this gap we estimate the cost of floods by conducting a hedonic price analysis of the housing market in Jakarta, combining data on house characteristics and rental prices from the 2007 Indonesian Family Life Survey with 2007 flood levels in various sub-districts (kecamatan). Besides utilising an Ordinary Least Squares regression, we also implement a spatial effect regression capturing neighbourhood spillovers. Our results indicate that a 1 per cent increase in the flood level reduced the monthly house rental price by Rp 1.7-3 million. Alternatively stated, the average cost per centimetre of flooding in Jakarta is between Rp 39-56 thousand per month.