The influence of natural hazards on urban housing location

The effects of natural hazards on urban housing location are investigated, using as an example seismic damage. The seismic damage function is allowed to arbitrarily vary in two-dimensional (r, θ) space rather than the usual one-dimensional models of Mills, Muth, Alonso, etc. Damage is assumed to only affect capital inputs (i.e., the structure), not land. Under the influence of expected damage, the population and CBD (treated as a point) are seen to shift toward lower expected damage. It is found that the relative importance of damage increases as the capital productivity parameter (b) of the Cobb-Douglas production function increases.