Some Like It (Less) Hot: Extracting Trade-Off Measures for Physically Coupled Amenities

Henry Klaiber, Joshua K. Abbott and V. Smith

Journal of the Association of Environmental and Resource Economists, 2017, vol. 4, issue 4, 1053 - 1079

Abstract: The urban heat island (UHI) provides direct evidence of human activities contributing to a feedback loop that changes ecosystem services by creating localized warming and differences in vegetated landscapes in areas around the urban core. This paper develops a new spatial-temporal panel estimator to recover consistent estimates of households' valuation of coupled landscape and temperature ecosystem services. Using data from Phoenix, AZ, we estimate a hedonic price function using an extension of the Hausman-Taylor model to overcome challenges associated with the varying spatial scales of capitalization of landscape and temperature variables and omitted variables. We find a positive and economically significant marginal willingness to pay (MWTP) for measures of green landscaping at multiple spatial scales and a separate MWTP for a one degree (F) reduction in outdoor temperatures of $72 monthly.

Date: 2017
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Working Paper: Some Like it (Less) Hot: Extracting Tradeoff Measures for Physically Coupled Amenities (2015)
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