EURO-ECO 2010 Hanover 2 - 3 Dezember 2010	Environmental, Engineering - Economic and Legal Aspects for Sustainable Living
	European Academy of Natural Sciences, Hanover European Scientific Society, Hanover University of Bremen, Bremen

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Abstracts EURO-ECO 2010

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The continuing increase of the level of physical pollution in residential areas leads to a growing negative effect of the environmental risk factors that predetermine the probability and the consequences of manifestation of such effects. The environment protection doctrine of the Russian Federation presumes that any business activities are hazardous to the environment, therefore the environmental risk is never equal to zero within any built areas. This demonstrates the need for consideration and minimization of the environmental risk to provide for the environmental safety of the population.

The aggregate quality measure for real estate assets is their value, an important component of which is the level of contamination of the ambient territory. Understanding of the factors affecting the value of the real estate assets is a critical condition of the correct functioning of the market.

At the same time, the current Russian practice of formation of the market prices for real estate assets does not reflect the whole multitude of the parameters contributing to the process of price formation. The environment condition parameters are, as a rule, separated from the real estate, resulting in underestimation of the effect of the environmental factors on the price figures. Valuation of real estate is often performed with just a pretended reference to the environmental characteristics. At the same time, comparison of the market value of urban real estate and the local environment pollution levels shows that in an overwhelming number of cases these parameters are proportional: the higher price corresponds to the higher level of pollution.

A methodology of environmental risk control should become an effective environmental and economic toolbox for adjustment of assessments of the market value of real estate assets, with regard to the actual levels of physical and material pollution of the environment, and the location area. In this connection, improvement of such a methodology applicable to the theory and practice of valuation decision-making concerning real estate appears to be a pressing research and practical task with a significant development potential.

The use of the environmental and economic assessment for adjustment of the real estate value requires not only determination of the kinds, levels, and probabilities of manifestation of the various types of negative effect of the pollutants (the environmental risk factors) and their financial consequences, but also elaboration of a viable mechanism for control of such consequences, integrated into the real estate operations.

In addition, certain steps can be taken to improve the environment as a real estate quality factor contributing to its value, in particular, adoption of new business tools based on the use of information and computer technologies and mathematical models, and also proper regulation and improvement of the methods of assessment of economic liability for earlier environmental damage. Despite the existence of such tools, the problem remains to be solved in a scientific context.

The result of assessment should be determination of the value of the real estate in question. This value means money or monetary equivalent, which the buyer is ready to exchange for such real estate.

Considering the current market conditions of the real estate market, all real estate assets should be valuated with regard to the environmental conditions in the area to be built.