Economic Assessment of South African Urban Green Spaces Using the Proximity Principle: Municipal Valuation vs. Market Value

Abstract

Urban green spaces (UGSs) deliver ecosystem services and potential economic benefits like increases in proximate residential property prices. The proximity principle (PP) premises that property prices increase as distance to UGS decreases. The PP has generally been confirmed by studies using municipal valuations and market values internationally. Conversely, South African studies have mostly employed municipal valuations and results have rejected the PP. There is an accepted interrelationship, but also often discrepancies, between municipal valuations and market values, presenting scope for this article to explore whether negative results are confirmed when market values replace municipal valuations in PP studies in the South African context. Accordingly, a statistical analysis of market values is completed in the Potchefstroom case study, where five test sites are replicated from studies that employed municipal valuations for longitudinal comparison. Results verify generally higher market values than municipal valuations and confirm the PP in two, but reject the PP in three, of five test sites. Previous studies employing municipal valuations in the case study confirmed the PP in one instance, thus presenting certain, but limited, inconsistencies between findings based on municipal valuation vs. market value. Results suggest that the market’s willingness to pay for UGS proximity is sensitive to the ecosystem services and disservices rendered by specific UGS, but not significantly more than reflected in municipal valuations. Overall, findings underscore the need to protect and curate features that encourage willingness to pay for UGS proximity to increase municipal valuations and property taxes to help finance urban greening.