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The Value of Climate Amenities: Evidence from US Migration Decisions

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  • Paramita Sinha
  • Maureen L. Cropper

Abstract

We value climate amenities by estimating a discrete location choice model for households that changed metropolitan statistical areas (MSAs) between 1995 and 2000. The utility of each MSA depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household’s 1995 location. We use the estimated trade-off between wages and climate amenities to value changes in mean winter and summer temperatures. At median temperatures for 1970 to 2000, a 1°F increase in winter temperature is worth less than a 1° decrease in summer temperature; however, the reverse is true at winter temperatures below 25°F. These results imply an average welfare loss of 2.7 percent of household income in 2020 to 2050 under the B1 (climate-friendly) scenario from the special report on emissions scenarios (Intergovernmental Panel on Climate Change 2000), although some cities in the Northeast and Midwest benefit. Under the A2 (more extreme) scenario, households in 25 of 26 cities suffer an average welfare loss equal to 5 percent of income.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18756.

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Date of creation: Feb 2013
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Handle: RePEc:nbr:nberwo:18756

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  1. Steve Berry & Oliver B. Linton & Ariel Pakes, 2004. "Limit Theorems for Estimating the Parameters of Differentiated Product Demand Systems," Review of Economic Studies, Oxford University Press, vol. 71(3), pages 613-654.
  2. Albouy, David & Graf, Walter & Kellogg, Ryan & Wolff, Hendrik, 2013. "Climate Amenities, Climate Change, and American Quality of Life," IZA Discussion Papers 7339, Institute for the Study of Labor (IZA).
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  8. Allen Klaiber, H. & Phaneuf, Daniel J., 2010. "Valuing open space in a residential sorting model of the Twin Cities," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 57-77, September.
  9. Patrick Bayer & Christopher Timmins, 2003. "Estimating Equilibrium Models of Sorting across Locations," Working Papers 862, Economic Growth Center, Yale University.
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Cited by:
  1. Albouy, David & Graf, Walter & Kellogg, Ryan & Wolff, Hendrik, 2013. "Climate Amenities, Climate Change, and American Quality of Life," IZA Discussion Papers 7339, Institute for the Study of Labor (IZA).
  2. Benjamin Wirth, 2013. "Ranking German regions using interregional migration - What does internal migration tells us about regional well-being?," ERSA conference papers ersa13p1254, European Regional Science Association.

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