Effects of Climate Change on House Prices in Outdoor Tourism Destinations: A Case Study of Southwestern Colorado

We estimate the historical effects of climate change on real estate prices in Southwestern Colorado, an area strongly influenced by outdoor recreation-based tourism, and we use these estimates to make projections for future house prices in the region based on a business-as-usual carbon dioxide emissions scenario. We find that maximum and minimum local summer temperatures and minimum local winter temperatures have significant positive long-run relationships with global carbon dioxide concentrations. Moreover, once we control for non-climate factors that affect the housing market, we find that house prices have significant negative long-run relationships with maximum and minimum local summer temperatures and a significant positive long-run relationship with local winter precipitation. Projections suggest that the effects of climate change on house prices would continue through the end of the century as they have over the past few decades under the business-as-usual scenario, albeit with the addition of a small but insignificantly estimated dampening of the growth rate. Our case study focuses on the San Juan Mountain region of Southwestern Colorado, but we expect that our results generalize to other outdoor tourism destinations in the Rocky Mountains and the Intermountain West.