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Disaggregate Hierarchical Decision Huff Model Incorporating Consumer Kaiyu Choices Among Shopping Sites Read chapter Read first chapter

2023 | OriginalPaper | Chapter

An Opportunity Cost Approach to Valuation of the River in a City Center Retail Environment: Another Application of the Kaiyu Markov Model

Authors : Saburo Saito, Kenichi Ishibashi

Published in: Recent Advances in Modeling and Forecasting Kaiyu

Publisher: Springer Nature Singapore

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Abstract

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.

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previous chapter How Many Customers Would Be Brought Back from Suburban Shopping Malls to the City Center by Redeveloping the City Center Station Building, JR Oita City, Japan? A Multivariate Poisson Model with Competitive Destinations
next chapter Extraction of Long Sightseeing Kaiyu Routes in the Kyushu Wide Region, Japan
Appendix
Available only for authorised users
Footnotes
1
Also refer to Saito and Kakoi [1], Saito [2], Chap. 1 in this volume, and Saito and Ishibashi [3], Chap. 5 in this volume.
 
2
Also refer to Ishibashi and Saito [17], Chap. 7 in this volume. Kaiyu studies on the city center commercial district of Kokura in Kitakyushu City started with Saito [18].
 
3
Kitakyushu City stands in the northmost part of Kyusyu Island, the southmost island among the four islands composing Japan. The city belonging to Fukuoka Prefecture, Japan, is an ordinance-designated city with a population of 961,286 as of the 2015 census and has seven wards. Kitakyushu City has long been famous for Japan’s most significant steel industry. While it once faced severe air and water pollution, now the city has achieved its rebirth as an environmental awareness city. The Japanese government designated the city as a model city for the environment, and recently OECD also designated the city as the first model city for SDGs. Seven wards composing Kitakyushu City correspond roughly to the old five cities, merged to establish the present Kitakyushu City in 1963.
 
4
Koshizuka and Ooki [19] and Ohsawa [20] discusses the number of bridges over a river from integral geometry.
 
5
Refer to the discussions in Sects. 2.1 and 4.1.
 
6
According to an interview with City Center Development Division, Kitakyushu City Government, Architectural and Urban Bureau.
 
7
For the full exposition from its start, basics, and recent developments of the shop-around or Kaiyu Markov model, refer to Saito and Sakamoto [27] and Saito et al. [28], Chaps. 3 and 4 in this volume, respectively.
 
8
Precisely speaking, the matrix PII is not a probability matrix. The row sum of PII is less than one because of the probability of returning home. For details regarding the shop-around or Kaiyu Markov model, refer to Saito et al. [28] and Saito and Ishibashi [3], respectively Chaps. 4 and 5 in this volume. The model was originally developed by Saito [4], Saito and Ishibashi [8, 9].
 
9
For details on this survey, see Ishibashi et al. [15, 16]. Also refer to Ishibashi and Saito [17], Chap. 7 in this volume.
 
10
Also refer to Ishibashi and Saito [17], Chap. 7 in this volume.
 
11
Although the model is called a forecast model in this study, we use its forecasted results as a monetary unit for comparing the present state and the counterfactual state without the river, represented by the changes in distances among the nodes within the city center commercial district. As known from its formulation, the model is not affected by these distances among the nodes within the city center commercial district, so its forecasted results are the same through the two states. Thus they serve as the basic monetary unit to compare the two states, such as the average purchase value per visit per consumer with the same attributes.
 
12
Refer to the Appendix for the mathematical exposition of RS1, RS2, RS3, and NET. The Appendix also discusses the interpretation of what should originally have been directed to Kaiyu flows between the east and west banks if it were not for the Murasaki River that is forced to remain in the shop-around or Kaiyu flows within each of the east and west banks due to the presence of the Murasaki River.
 
13
The original version of this chapter appeared in Saito et al. [29], which was first presented as Saito et al. [30].
 
14
For the derivation of Eq. (22), in particular, the second and the third equations, refer to Saito et al. [28], Chap. 4 of this volume, especially, Proposition 4.11, “Kaiyu movements among shopping sites,” in Sect. 3.5.
 
15
For more details on the reproducibility theorem, refer to Saito et al. [28], Chap. 4 of this volume, in particular, Theorem 4.2 “Kaiyu movements reproducibility theorem,” in Sect. 5.3.
 
Literature
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Metadata
Title
An Opportunity Cost Approach to Valuation of the River in a City Center Retail Environment: Another Application of the Kaiyu Markov Model
Authors
Saburo Saito
Kenichi Ishibashi
Copyright Year
2023
Publisher
Springer Nature Singapore
Book
Recent Advances in Modeling and Forecasting Kaiyu

Print ISBN: 978-981-9912-40-7

Electronic ISBN: 978-981-9912-41-4

Copyright Year: 2023

DOI
https://doi.org/10.1007/978-981-99-1241-4_12