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Household Location Decisions and the Value of Climate Amenities

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  • Sinha, Paramita

    (RTI International)

  • Cropper, Maureen

    (University of Maryland and Resources for the Future)

Abstract

We value climate amenities by estimating a discrete location choice model for US households. The utility of each metropolitan statistical area (MSA) depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household head’s birthplace. We use the estimated trade-off among wages, housing costs, and climate amenities to value changes in mean winter and summer temperatures. We find that households sort among MSAs as a result of heterogeneous tastes for winter and summer temperatures. Preferences for winter and summer temperatures are negatively correlated. Households that prefer milder winters, on average, prefer cooler summers, and households that prefer colder winters prefer warmer summers. Households in the Midwest region, on average, have lower marginal willingness to pay to increase winter and reduce summer temperatures than households in the Pacific and South Atlantic census divisions. We use our results to value changes in winter and summer temperatures for the period 2020 to 2050 under the B1 (climate-friendly) and A2 (more extreme) climate scenarios. On average, households are willing to pay 1 percent of income to avoid the B1 scenario and 2.4 percent of income to avoid the A2 scenario.

Suggested Citation

  • Sinha, Paramita & Cropper, Maureen, 2016. "Household Location Decisions and the Value of Climate Amenities," Discussion Papers dp-16-02, Resources For the Future.
  • Handle: RePEc:rff:dpaper:dp-16-02
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    References listed on IDEAS

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    Cited by:

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    2. Anthony M Yezer & Stephen J Popick, 2017. "Climate Preferences, Obesity, and Unobserved Heterogeneity in Cities," The Review of Regional Studies, Southern Regional Science Association, vol. 47(3), pages 309-329, Fall.
    3. Park, Jisung & Bangalore, Mook & Hallegatte, Stephane & Sandhoefner, Evan, 2018. "Households and heat stress: estimating the distributional consequences of climate change," Environment and Development Economics, Cambridge University Press, vol. 23(3), pages 349-368, June.
    4. Ha Trong Nguyen & Huong Thu Le & Luke B Connelly, 2021. "Weather and children's time allocation," Health Economics, John Wiley & Sons, Ltd., vol. 30(7), pages 1559-1579, July.
    5. Dan S. Rickman & Hongbo Wang, 2020. "Whither the American west economy? Natural amenities, mineral resources and nonmetropolitan county growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 65(3), pages 673-701, December.
    6. Seoyong Kim & Seol A. Kwon & Jae Eun Lee & Byeong-Cheol Ahn & Ju Ho Lee & Chen An & Keiko Kitagawa & Dohyeong Kim & Jaesun Wang, 2020. "Analyzing the Role of Resource Factors in Citizens’ Intention to Pay for and Participate in Disaster Management," Sustainability, MDPI, Open Access Journal, vol. 12(8), pages 1-25, April.
    7. Sinha, Paramita & Coville, Robert C. & Hirabayashi, Satoshi & Lim, Brian & Endreny, Theodore A. & Nowak, David J., 2021. "Modeling lives saved from extreme heat by urban tree cover✰," Ecological Modelling, Elsevier, vol. 449(C).
    8. Bakkensen, Laura A. & Ma, Lala, 2020. "Sorting over flood risk and implications for policy reform," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    9. Dan S. Rickman & Hongbo Wang, 0. "Whither the American west economy? Natural amenities, mineral resources and nonmetropolitan county growth," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 0, pages 1-29.
    10. Joséphine Leuba, 2019. "Natural amenities and the spatial distribution of Swiss income," IRENE Working Papers 19-04, IRENE Institute of Economic Research.
    11. Baylis, Patrick, 2020. "Temperature and temperament: Evidence from Twitter," Journal of Public Economics, Elsevier, vol. 184(C).
    12. Branikas, Ioannis & Hong, Harrison & Xu, Jiangmin, 2020. "Location choice, portfolio choice," Journal of Financial Economics, Elsevier, vol. 138(1), pages 74-94.
    13. Lu, Jiajun, 2020. "Household residential location choice in retirement: The role of climate amenities," Regional Science and Urban Economics, Elsevier, vol. 84(C).
    14. Oliveira, Jaqueline & Pereda, Paula, 2020. "The impact of climate change on internal migration in Brazil," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).

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    More about this item

    Keywords

    climate amenities; discrete choice models; taste sorting; welfare impacts of temperature changes;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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