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The Amenity Value of Climate to German Households

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  • Katrin Rehdanz

    (Centre for Marine and Climate Research, Hamburg University)

  • David Maddison

    (Institute of Economics, University of Southern Denmark)

Abstract

This study uses the hedonic approach to measure the amenity value of climate in Germany. Unlike in earlier research separate hedonic wage and house price regressions are estimated for relatively small geographic areas and formal tests undertaken to determine whether the coefficients describing the impact of climate variables are homogenous across these areas. Evidence suggests that German households are compensated for climate amenities mainly through hedonic housing markets. Given that climate is largely unproductive to industry and few industries spend more on land than labour this is consistent with what theory would predict. Throughout Germany house prices are higher in areas with higher January temperatures, lower July temperatures and lower January precipitation. In East Germany wages are higher in areas with higher January precipitation. The full implicit price of climate variables however is very uncertain.

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Bibliographic Info

Paper provided by Fondazione Eni Enrico Mattei in its series Working Papers with number 2004.57.

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Date of creation: Mar 2004
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Handle: RePEc:fem:femwpa:2004.57

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Keywords: Climate change; Germany; Hedonic pricing;

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References

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  1. Cragg, Michael & Kahn, Matthew, 1997. "New Estimates of Climate Demand: Evidence from Location Choice," Journal of Urban Economics, Elsevier, vol. 42(2), pages 261-284, September.
  2. Graves, Philip E., 1980. "Migration and climate," MPRA Paper 19916, University Library of Munich, Germany.
  3. Maddison, David & Bigano, Andrea, 2003. "The amenity value of the Italian climate," Journal of Environmental Economics and Management, Elsevier, vol. 45(2), pages 319-332, March.
  4. Schnare, Ann B. & Struyk, Raymond J., 1976. "Segmentation in urban housing markets," Journal of Urban Economics, Elsevier, vol. 3(2), pages 146-166, April.
  5. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  6. Maddison, David, 2003. "The amenity value of the climate: the household production function approach," Resource and Energy Economics, Elsevier, vol. 25(2), pages 155-175, May.
  7. Jeffrey Englin, 1996. "Estimating the amenity value of rainfall," The Annals of Regional Science, Springer, vol. 30(3), pages 273-283.
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Cited by:
  1. Jacqueline M. Hamilton, 2005. "Coastal landscape and the hedonic price of accommodation," Working Papers FNU-91, Research unit Sustainability and Global Change, Hamburg University, revised Sep 2005.
  2. Rehdanz, Katrin & Maddison, David, 2005. "Climate and happiness," Ecological Economics, Elsevier, vol. 52(1), pages 111-125, January.
    • Katrin Rehdanz & David J. Maddison, 2003. "Climate and Happiness," Working Papers FNU-20, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2003.
  3. Ernest Molua, 2012. "Climate extremes, location vulnerability and private costs of property protection in Southwestern Cameroon," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(3), pages 293-310, March.
  4. Gary W. Yohe & Richard S.J. Tol, 2007. "Precaution And A Dismal Theorem: Implications For Climate Policy And Climate Research," Working Papers FNU-145, Research unit Sustainability and Global Change, Hamburg University, revised Aug 2007.
  5. Paul_Cheshire & Stefano_Magrini, 2004. "Population Growth in European Cities: weather matters – but only nationally," Urban/Regional 0410001, EconWPA.
  6. Dominik Weiß, 2008. "Mietpreise und Lebensqualität: Ist das Wohnen in Ostdeutschland wirklich günstig?," IWH Discussion Papers 12, Halle Institute for Economic Research.
  7. Paul Cheshire & Stefano Magrini, 2005. "Population Growth in European Cities: weather matters – but only nationally," Urban/Regional 0506009, EconWPA.
  8. Weiß, Dominik, 2010. "Kompensieren Mietpreisunterschiede ungleichwertige Lebensverhältnisse?," Arbeitsmaterial der ARL: Aufsätze, in: Gleichwertigkeit der Lebensverhältnisse zwischen Politik und Marktmechanismus: Empirische Befunde aus den Ländern Sachsen, Sachsen-Anhalt und Thüri, pages 71-95 Akademie für Raumforschung und Landesplanung (ARL) - Leibniz-Forum für Raumwissenschaften.
  9. Zhou Yuan & Richard S.J. Tol, 2005. "Water Use in China’s Domestic, Industrial and Agricultural Sectors: An Empirical Analysis," Working Papers FNU-67, Research unit Sustainability and Global Change, Hamburg University, revised Jun 2005.
  10. David Albouy & Walter Graf & Ryan Kellogg & Hendrik Wolff, 2010. "Aversion to Extreme Temperatures, Climate Change, and Quality of Life," Working Papers UWEC-2011-03, University of Washington, Department of Economics.
  11. Denis Gerstorf & Nilam Ram & Jan Goebel & Jürgen Schupp & Ulman Lindenberger & Gert G. Wagner, 2010. "Where People Live and Die Makes a Difference: Individual and Geographic Disparities in Well-Being Progression at the End of Life," SOEPpapers on Multidisciplinary Panel Data Research 287, DIW Berlin, The German Socio-Economic Panel (SOEP).

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