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Demand for Environmental Quality: A Spatial Hedonic Approach

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We first estimate the relationship between house prices and environmental disamenities using spatial statistics, confirming that nearby point-source pollutants depress house price. We then calculate implicit prices of environmental quality and related characteristics from the house price hedonics to estimate a demand curve for environmental quality, finding a price elasticity of demand of ?0.12. We find evidence of significant spatial effects in both the hedonic and demand estimations. We find that environmental quality and school quality are purchased together (elasticity =-0.80), environmental quality and house size are substitutes (elasticity=0.91), and environmental quality and lot size are not related goods.

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Paper provided by Department of Economics, Louisiana State University in its series Departmental Working Papers with number 2005-08.

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Handle: RePEc:lsu:lsuwpp:2005-08

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Cited by:
  1. Joshua C. Hall, 2013. "Does School District and Municipality Border Congruence Matter? A Spatial Hedonic Approach," Working Papers 13-02, Department of Economics, West Virginia University.
  2. Muriel Travers & Abdelhak Nassiri & Gildas Appéré & François Bonnieux, 2008. "Évaluation des bénéfices environnementaux par la méthode des prix hédonistes : une application au cas du littoral," Économie et Prévision, Programme National Persée, vol. 185(4), pages 47-62.
  3. Gildas Appéré & Morgane Chevé & Emmanuel Bonnet & Muriel Travers, 2009. "Perception des risques industriels dans une zone estuarienne : une analyse hédoniste spatiale," Économie et Prévision, Programme National Persée, vol. 190(4), pages 135-158.
  4. Mueller, Julie M. & Loomis, John B., 2008. "Spatial Dependence in Hedonic Property Models: Do Different Corrections For Spatial Dependence Result in Economically Significant Differences in Estimated Implicit Prices?," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 33(2), August.

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