As a leading economist, Lu Han, professor of real estate and urban land economics at the Wisconsin School of Business, is in the business of modeling markets and crunching data, but it’s the stories behind the models and data that drive her—a quest to make everyday lives better.
“We all need to have shelter, a living space whether by renting or owning, regardless of one’s income, race, or age. When someone cannot afford housing, they lose not just that home, but also the benefits tied to its neighborhood, including access to schools, jobs, opportunities, and amenities. Few factors shape a person’s life more profoundly than where they live,” says Han, the Nathan F. Brand Chair in Real Estate. “Working in the real estate market is a way for me to contribute to something that is quite important to our society.”
Han arrived at WSB in 2020 from the University of Toronto’s Rotman School of Management, where she served as professor in economic analysis and policy, Premier’s Research Chair in Productivity and Competitiveness, and founding academic director of the Real Estate Center.
Trained as a microeconomist, Han is a renowned, world-class expert in the field of real estate and urban economics. She is a frequent speaker and contributor, delivering the keynote speeches at the Canadian Economics Association Conference and at the Zurich-Bern Real Estate Finance and Urban Economics Conference this spring, and the Toulouse School of Economics’ ECHOPPE Conference on the Economics of Housing and Housing Policies last spring in France. She co-hosted the International Housing Affordability and Sustainability Conference in 2023 in Madison, Wisconsin, with WSB colleague Chris Timmins, Gary J. Gorman Affordable Housing Professor and professor of real estate and urban land economics. Han was recently elected as President-Elect of the American Real Estate and Urban Economics Association.
“My interest in real estate markets began with a desire to understand how households make their most important financial decision—buying or selling a home—in an uncertain environment,” says Han. “My current research emphasizes the interactions between urban economics and real estate markets, focusing on three key aspects: affordability, sustainability, and inequality.”
Her recent work was inspired not only by the people in her community, but one person in particular.
Exploring the impact of urban trees
One of Han’s working papers, “Cool Cities: The Value of Urban Trees” co-authored with Chris Timmins, Stephan Heblich of the University of Toronto, and Yanos Zylberberg of the University of Bristol, holds both a personal and professional draw.
“Trees are something close to my heart,” says Han. “My grandfather was a forestry professor. Growing up, I always knew that we had a tree expert, a forest expert, in my family who cared a lot about those trees.” Han’s grandfather earned his doctorate in Germany and spent his career in China and Germany.
“He said that when you visit a city or a campus, two older things shape each of those: trees and buildings,” Han remembers. “People, they come and go, but buildings and trees stay; they witness generations of effort, symbolizing the continuity and growth of culture and knowledge. He studied the natural environment, and I study the built environment. I have always wanted to write something about treeconomics—a subject that connects my interest with his.”
Han and her co-authors’ study takes place within the larger context of cities, climate change, and urban forestry. Scientists have documented that urban areas are heating up faster than their rural counterparts, a phenomenon referred to as an “urban heat island effect.” A combination of climate change, pollution and economic development has resulted in the average North American city being more than 3 degrees Celsius warmer in the summer of 2020 compared to 1985. Interestingly, cities that have become greener over this period experienced less warming, suggesting that trees play a crucial role in mitigating urban heat island effects.
The United Nations’ 2030 Agenda for Sustainable Development includes initiatives focused on the planet, and many cities have adopted their own 2030 goals, such as achieving 40% tree cover by 2030. “We know getting there is costly and we’re using taxpayer money, so we need to know the benefits, quantified in dollars. But assigning a monetary value for urban trees is tricky, because ecosystem services like the one from trees are not traded in the market,” Han says.
Han and her co-authors quantify the value people place on trees by estimating how much more they pay for houses in greener neighborhoods, along with the benefits these trees provide, including temperature moderation, improved air quality, and energy savings. “This exercise can be challenging,” Han explains. “Leafy neighborhoods tend to be well-established, with better school quality and more energy-conscious residents, making it difficult to isolate the value of trees.”
To address this, Han and her co-authors take advantage of a quasi-experimental opportunity from an exotic beetle infestation—the emerald ash borer beetle—that exclusively feeds on ash trees. The beetle was accidentally introduced to North America in 2002 and has killed over 12 million ash trees in the United States, including 10,000 in Madison. Han’s study focuses on Toronto, Canada, one of the greenest cities in North America. The city lost about 860,000 ash trees—about 8% of its tree canopy—within 10 years after the first signs of infestation around 2007.
While the infestation presents a significant challenge for urban forestry, Han views it as a unique opportunity to estimate the value of urban trees. “The spatial distribution of ash trees was actually inherited from the earlier spatial distribution of elm trees,” Han explains. “After the Dutch elm disease— a previous infestation of similar scale—swept through North America, most cities planted ash trees as a ‘second-best’ alternative. This historical spatial distribution of ash trees versus other urban tree species allows us to isolate variations in tree canopy that aren’t directly linked to today’s house prices or neighborhood characteristics.”
Using data from urban forest assessments for Toronto from 2007 to 2020 across the metropolis’ 45,000 postal codes, along with records of city-managed urban trees (such as tree species, cut downs, maintenance dates), data on Toronto’s residential property transactions and monthly gas and electricity readings, the study found one additional tree increased property value by 0.45% within a postal code. The neighborhood hardest hit by the beetles lost 7 percentage points in tree canopy cover, resulting in a 7% property price decline. Moreover, one additional percentage point of tree cover within a postal code results in a 0.05 degree Celsius reduction in the local summer temperature, leading to a reduction of energy consumption of roughly 2.5%.
The study also holds implications for redistributive effects. Despite trees being a public asset, leafy neighborhoods in many cities are often located in wealthier districts, while poorer neighborhoods with fewer trees potentially carry more of the heat burden. This means that the rich grow richer not only in financial terms but also benefit more from public goods, such as urban trees. Lower-income residents may miss out on the many benefits that trees provide, including shade, cleaner air, energy savings, enhanced outdoor experience, and improved neighborhood character.
“The local services and benefits that trees provide are essential for fostering greener, more sustainable and climate-resilient urban living, and quantifying that with a price is a very challenging question and a very important one for public debates right now,” says Han. “By measuring the economic and ecological benefits of urban trees, I hope this work can help city planners make more informed decision about not only how many trees to plant, but also how to distribute them equitably.”
Han’s research studies have generated significant impact, contributing to the impressive reputation and rankings of the Department of Real Estate and Urban Land Economics and earning her the 2024 Erwin A. Gaumnitz Distinguished Faculty Research Award. For the third year in a row, WSB’s undergraduate real estate program was ranked No. 1 by the 2024-25 U.S. News & World Report.
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