IDEAS home Printed from https://ideas.repec.org/a/eee/regeco/v68y2018icp268-276.html
   My bibliography  Save this article

Valuing sunshine

Author

Listed:
  • Fleming, David
  • Grimes, Arthur
  • Lebreton, Laurent
  • Maré, David
  • Nunns, Peter

Abstract

Sunlight influences people's housing decisions, but city intensification may reduce sunlight exposure for neighboring properties, causing a negative externality. There are hitherto no rigorous estimates of the cost of this externality. Using over 5000 observations on house sales in Wellington, New Zealand, we derive the willingness to pay for an extra daily hour of sunlight, on average, across the year. After controlling for locational sorting and other considerations in an hedonic regression, we find that each extra daily hour of sunlight exposure is associated with a 2.6% increase in house sale price. This estimate is robust to a variety of alternative specifications in which we test for non-linearities and amplifying factors by interacting sunlight with a range of other influences. Our results can be used to price negative externalities caused by new development, so replacing or augmenting regulations designed to address impacts of development on neighbors’ sunshine.

Suggested Citation

  • Fleming, David & Grimes, Arthur & Lebreton, Laurent & Maré, David & Nunns, Peter, 2018. "Valuing sunshine," Regional Science and Urban Economics, Elsevier, vol. 68(C), pages 268-276.
    • Handle: RePEc:eee:regeco:v:68:y:2018:i:c:p:268-276
    DOI: 10.1016/j.regsciurbeco.2017.11.008
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0166046217302387
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    • David Fleming & Arthur Grimes & Laurent Lebreton & David C Maré & Peter Nunns, 2017. "Valuing Sunshine," Working Papers 17_13, Motu Economic and Public Policy Research.

    References listed on IDEAS

    as
    1. Edward L. Glaeser, Jed Kolko, and Albert Saiz, 2001. "Consumer city," Journal of Economic Geography, Oxford University Press, vol. 1(1), pages 27-50, January.
    2. Kwong-Wing Chau & S.K. Wong & Y. Yau & A.K.C. Yeung, 2007. "Determining Optimal Building Height," Urban Studies, Urban Studies Journal Limited, vol. 44(3), pages 591-607, March.
    3. Olga Filippova, 2009. "The influence of submarkets on water view house price premiums in New Zealand," International Journal of Housing Markets and Analysis, Emerald Group Publishing, vol. 2(1), pages 91-105, March.
    4. Yan Kestens & Marius Thériault & François Des Rosiers, 2004. "The Impact of Surrounding Land Use and Vegetation on Single-Family House Prices," Environment and Planning B, , vol. 31(4), pages 539-567, August.
    5. Arthur Grimes & Eyal Apatov & Larissa Lutchman & Anna Robinson, 2016. "Eighty years of urban development in New Zealand: impacts of economic and natural factors," New Zealand Economic Papers, Taylor & Francis Journals, vol. 50(3), pages 303-322, September.
    6. Dastrup, Samuel R. & Graff Zivin, Joshua & Costa, Dora L. & Kahn, Matthew E., 2012. "Understanding the Solar Home price premium: Electricity generation and “Green” social status," European Economic Review, Elsevier, vol. 56(5), pages 961-973.
    7. Mark Ferguson & Kamar Ali & M. Rose Olfert & Mark Partridge, 2007. "Voting with Their Feet: Jobs versus Amenities," Growth and Change, Wiley Blackwell, vol. 38(1), pages 77-110, March.
    8. Paul Cheshire & Stefano Magrini, 2006. "Population growth in European cities: Weather matters - but only nationally," Regional Studies, Taylor & Francis Journals, vol. 40(1), pages 23-37.
    9. Glaeser, Edward L & Gyourko, Joseph & Saks, Raven, 2005. "Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 331-369, October.
    10. Robert J. Hill, 2013. "Hedonic Price Indexes For Residential Housing: A Survey, Evaluation And Taxonomy," Journal of Economic Surveys, Wiley Blackwell, vol. 27(5), pages 879-914, December.
    11. Rappaport, Jordan, 2007. "Moving to nice weather," Regional Science and Urban Economics, Elsevier, vol. 37(3), pages 375-398, May.
    12. 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.
    13. Wei Li & Jean-Daniel Saphores, 2012. "A Spatial Hedonic Analysis of the Value of Urban Land Cover in the Multifamily Housing Market in Los Angeles, CA," Urban Studies, Urban Studies Journal Limited, vol. 49(12), pages 2597-2615, September.
    14. Yan Kestens & Marius Thériault & François Des Rosiers, 2004. "The impact of surrounding land use and vegetation on single-family house prices," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 31(4), pages 539-567, July.
    15. Kuminoff, Nicolai V. & Jarrah, Abdul Salam, 2010. "A new approach to computing hedonic equilibria and investigating the properties of locational sorting models," Journal of Urban Economics, Elsevier, vol. 67(3), pages 322-335, May.
    16. Sylvia Kämpfer & Michael Mutz, 2013. "On the Sunny Side of Life: Sunshine Effects on Life Satisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 110(2), pages 579-595, January.
    17. Bayer, Patrick & Timmins, Christopher, 2005. "On the equilibrium properties of locational sorting models," Journal of Urban Economics, Elsevier, vol. 57(3), pages 462-477, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Skyscrapers and Shadows: The Value of Sunshine in the City
      by Jason Barr in Skynomics Blog on 2019-03-13 12:35:33

    More about this item

    Keywords

    R2; R3; Sunlight; House price; Hedonic model; View; Elevation;

    JEL classification:

    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • N50 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries - - - General, International, or Comparative

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:regeco:v:68:y:2018:i:c:p:268-276. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/regec .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.