2009), “Earthquake Risks and Land Prices: Evidence from the Tokyo Metropolitan

The current paper empirically addresses risk aversion of households and firms toward earthquake risks using a hazard map compiled for the entire region by the Tokyo metro-politan government in 1998. It finds strong evidence for the impact of earthquake risks on land pricing; land prices have been substantially lower in risky areas than in safe areas. That impact became more evident in the 1990s than in the 1980s, indicating that house-holds and firms were becoming more sensitive to earthquake risks. In addition, this paper carefully examines the consistency of the estimated magnitude of earthquake risk premi-ums within a framework of the expected utility hypothesis. JEL Classification Numbers: R14, R22, G11. 1