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Sometimes Close Is Good Enough: The Value Of Nearby Environmental Amenities

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  • Lucie Schmidt
  • Paul N. Courant

Abstract

ABSTRACT An extensive empirical literature exists, showing that variations in region‐specific amenities can account for persistent differences in real wages across regions. However, this literature has considered only amenities in the same location as the household. This paper argues that environmental amenities at some distance from but accessible to urban areas may lead to negative compensating wage differentials. We use a general equilibrium framework and data from the 1995 Current Population Survey to calculate implicit amenity prices based on measures of distance to environmental amenities. Our results suggest that amenities outside the metropolitan area do generate compensating wage differentials, as workers are willing to accept lower wages to live in accessible proximity to “nice” places. This implies that these places provide a positive externality to those communities that find them accessible. The estimated effects are quantitatively important, suggesting that these externalities should be taken into account in policy making.

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  • Lucie Schmidt & Paul N. Courant, 2006. "Sometimes Close Is Good Enough: The Value Of Nearby Environmental Amenities," Journal of Regional Science, Wiley Blackwell, vol. 46(5), pages 931-951, December.
    • Handle: RePEc:bla:jregsc:v:46:y:2006:i:5:p:931-951
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    File URL: https://doi.org/10.1111/j.1467-9787.2006.00491.x
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    1. Stephen Sheppard, 2013. "Museums in the neighborhood: the local economic impact of museums," Chapters,in: Handbook of Industry Studies and Economic Geography, chapter 7, pages 191-204 Edward Elgar Publishing.
    2. Braakmann, Nils, 2013. "Crime, health and wellbeing – Longitudinal evidence from Mexico," MPRA Paper 44885, University Library of Munich, Germany.
    3. Abildtrup, Jens & Garcia, Serge & Olsen, Søren Bøye & Stenger, Anne, 2013. "Spatial preference heterogeneity in forest recreation," Ecological Economics, Elsevier, vol. 92(C), pages 67-77.
    4. David Albouy & Bert Lue, 2014. "Driving to Opportunity: Local Rents, Wages, Commuting Costs and Sub-Metropolitan Quality of Life," NBER Working Papers 19922, National Bureau of Economic Research, Inc.
    5. Mark D. Partridge, 2010. "The duelling models: NEG vs amenity migration in explaining US engines of growth," Papers in Regional Science, Wiley Blackwell, vol. 89(3), pages 513-536, August.
    6. Longhi, Simonetta, 2013. "Impact of cultural diversity on wages, evidence from panel data," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 797-807.
    7. Braakmann, Nils, 2012. "How do individuals deal with victimization and victimization risk? Longitudinal evidence from Mexico," Journal of Economic Behavior & Organization, Elsevier, vol. 84(1), pages 335-344.
    8. Stephens, Heather & Partridge, Mark, 2012. "Lake Amenities, Environmental Degradation, and Great Lakes Regional Growth," MPRA Paper 43903, University Library of Munich, Germany.
    9. repec:spr:anresc:v:59:y:2017:i:3:d:10.1007_s00168-016-0765-6 is not listed on IDEAS
    10. Albouy, David & Lue, Bert, 2015. "Driving to opportunity: Local rents, wages, commuting, and sub-metropolitan quality of life," Journal of Urban Economics, Elsevier, vol. 89(C), pages 74-92.
    11. Elena G. Irwin & Andrew M. Isserman & Maureen Kilkenny & Mark D. Partridge, 2010. "A Century of Research on Rural Development and Regional Issues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(2), pages 522-553.
    12. Haugen, Katarina & Vilhelmson, Bertil, 2013. "The divergent role of spatial access: The changing supply and location of service amenities and service travel distance in Sweden," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 10-20.
    13. Guangqing Chi & David Marcouiller, 2013. "Natural amenities and their effects on migration along the urban–rural continuum," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 50(3), pages 861-883, June.
    14. Braakmann, Nils, 2009. "Is there a compensating wage differential for high crime levels? First evidence from Europe," Journal of Urban Economics, Elsevier, vol. 66(3), pages 218-231, November.
    15. Simonetta Longhi, 2011. "Impact of Cultural Diversity on Wages and Job Satisfaction in England," Norface Discussion Paper Series 2011010, Norface Research Programme on Migration, Department of Economics, University College London.
    16. Braakmann, Nils, 2012. "The link between non-property crime and house prices – Evidence from UK street-level data," MPRA Paper 44884, University Library of Munich, Germany.
    17. Michael Brady & Elena Irwin, 2011. "Accounting for Spatial Effects in Economic Models of Land Use: Recent Developments and Challenges Ahead," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 48(3), pages 487-509, March.
    18. repec:bla:growch:v:47:y:2016:i:4:p:461-480 is not listed on IDEAS
    19. Germán M. Izón & Michael S. Hand & Matias Fontenla & Robert P. Berrens, 2010. "The Economic Value Of Protecting Inventoried Roadless Areas: A Spatial Hedonic Price Study In New Mexico," Contemporary Economic Policy, Western Economic Association International, vol. 28(4), pages 537-553, October.
    20. Yong Chen & David J. Lewis & Bruce Weber, 2016. "Conservation Land Amenities And Regional Economies: A Postmatching Difference-In-Differences Analysis Of The Northwest Forest Plan," Journal of Regional Science, Wiley Blackwell, vol. 56(3), pages 373-394, June.
    21. Michael S. Hand & Jennifer A. Thacher & Daniel W. McCollum & Robert P. Berrens, 2008. "Intra-Regional Amenities, Wages, and Home Prices: The Role of Forests in the Southwest," Land Economics, University of Wisconsin Press, vol. 84(4), pages 635-651.
    22. David A. McGranahan & Timothy R. Wojan & Dayton M. Lambert, 2011. "The rural growth trifecta: outdoor amenities, creative class and entrepreneurial context -super-§," Journal of Economic Geography, Oxford University Press, vol. 11(3), pages 529-557, May.

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