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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
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    • 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
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    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

    Citations

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    Cited by:

    1. Ahlfeldt, Gabriel M. & Barr, Jason, 2022. "The economics of skyscrapers: A synthesis," Journal of Urban Economics, Elsevier, vol. 129(C).
    2. Panduro, Toke Emil & Jensen, Cathrine Ulla & Lundhede, Thomas Hedemark & von Graevenitz, Kathrine & Thorsen, Bo Jellesmark, 2018. "Eliciting preferences for urban parks," Regional Science and Urban Economics, Elsevier, vol. 73(C), pages 127-142.
    3. Cuberes, David & Roberts, Jennifer & Sechel, Cristina, 2019. "Household location in English cities," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 120-135.
    4. Jason Barr & Jennifer Johnson, 2020. "Skyscrapers and the Happiness of Cities," Eastern Economic Journal, Palgrave Macmillan;Eastern Economic Association, vol. 46(2), pages 344-377, April.

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    More about this item

    Keywords

    R2; R3; Sunlight; House price; Hedonic model; View; Elevation;
    All these keywords.

    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

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