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Green Premium Evidence from Climatic Areas: A Case in Southern Europe, Alicante (Spain)

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  • Paloma Taltavull de La Paz

    (Department of Applied Economic Analysis, University of Alicante, 03690 San Vicente del Raspeig, Spain)

  • V. Raul Perez-Sanchez

    (Building Sciences and Urbanism Department, University of Alicante, 03690 San Vicente del Raspeig, Spain)

  • Raul-Tomas Mora-Garcia

    (Building Sciences and Urbanism Department, University of Alicante, 03690 San Vicente del Raspeig, Spain)

  • Juan-Carlos Perez-Sanchez

    (Building Sciences and Urbanism Department, University of Alicante, 03690 San Vicente del Raspeig, Spain)

Abstract

The existence of a green premium in house (asking) prices in Alicante province, Spain, are analyzed using circa 9000 property observations. In developing the sample, information from energy efficiency certificates was matched with two other databases. The model tests for green premium by climatic zones using pool Ordinary Least Squares (pool-OLS) and Instrumental Variables (IV) hedonic models, adds new knowledge concerning the existence of green premiums from Southern Europe, explores differences in their estimation by climatic zone, debates the nature of the estimated green parameters, and explains the role of endogeneity in hedonic green premium models. The empirical evidence assesses the sensitivity of asking price to either energy consumption (KWh) or carbon dioxide emissions (CO 2 ) with an apparent premium of 3%, and captures an association with efficiency rating from G to F of 1.8% and from F to E of 1.1%. Significantly, the results relating to price responses show a distinct variation between the coast and the cooler climatic zone of the interior. The paper shows that energy efficiency incentive policies should discriminate by climatic areas, and provides a price reference by which to assess the amount of incentives needed to achieve European Union (EU) objectives.

Suggested Citation

  • Paloma Taltavull de La Paz & V. Raul Perez-Sanchez & Raul-Tomas Mora-Garcia & Juan-Carlos Perez-Sanchez, 2019. "Green Premium Evidence from Climatic Areas: A Case in Southern Europe, Alicante (Spain)," Sustainability, MDPI, vol. 11(3), pages 1-29, January.
    • Handle: RePEc:gam:jsusta:v:11:y:2019:i:3:p:686-:d:201440
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    6. Fuad Ganbarov & Klaudia Smoląg & Rashad Muradov & Konul Aghayeva & Rumella Jafarova & Yashar Mammadov, 2020. "Sustainable Development of the Mortgage Market in Azerbaijan: Commercial Risks of Housing Construction, Social Vision, and State Influence," Sustainability, MDPI, vol. 12(12), pages 1-18, June.
    7. Grazia Napoli & Rossella Corrao & Gianluca Scaccianoce & Simona Barbaro & Laura Cirrincione, 2022. "Public and Private Economic Feasibility of Green Areas as a Passive Energy Measure: A Case Study in the Mediterranean City of Trapani in Southern Italy," Sustainability, MDPI, vol. 14(4), pages 1-20, February.
    8. Franz Fuerst & Ben Dalton, 2019. "Gibt es einen wissenschaftlichen Konsens zur Wirtschaftlichkeit nachhaltiger Immobilien? [Is there a scientific consensus on the economic viability of sustainable buildings?]," Zeitschrift für Immobilienökonomie (German Journal of Real Estate Research), Springer;Gesellschaft für Immobilienwirtschaftliche Forschung e. V., vol. 5(1), pages 173-191, November.
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