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ESTIMATING DEMAND FOR GOOD CLIMATE AND AIR QUALITY IN TAIWAN

Daigee Shaw (), Ju-Chin Huang, Chuan-Yao Lin (), Ting-Yu Hsu () and Mingche Tsai ()
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Ju-Chin Huang: University of New Hampshire, Durham, New Hampshire, USA
Chuan-Yao Lin: Academia Sinica, Nangang Dist., Taipei City, Taiwan
Ting-Yu Hsu: National Chengchi University, Zhinan Road, Wenshan Dist., Taipei City, Taiwan
Mingche Tsai: National Taipei University, Daxue Road, Sanxia Dist., New Taipei City, Taiwan

Climate Change Economics (CCE), 2021, vol. 12, issue 01, 1-24

Abstract: We measure the amenity values of climate and air quality in Taiwan using the two-step hedonic price method (HPM). Separate hedonic housing price equations, one for each of three metropolitan areas that represent respective housing markets in Northern, Central, and Southern Taiwan, are estimated. We find evidence of a significant impact of climate and air quality on housing prices. As expected, residents in Taiwan prefer a warmer winter, cooler summer, lower humidity, and better air quality. Based on the results of the housing price regression, we compute implicit prices for environmental amenities, and then pool observations from all three metropolitan areas to estimate the demand for environmental amenities. The estimated demand functions for environmental amenities are used to evaluate the benefits and losses from changes in climate and air quality in Taiwan. Our results show that, compared to the benefits of a higher temperature in January, the losses from the rise in temperature in July are much higher in such a way that global warming is resulting in significant net losses in Taiwan. The area-specific welfare analysis in this study will help in informing climate change policy formulation and decision-making in Taiwan.

Keywords: Hedonic price method; valuation of climate change; demand for environmental amenities; Taiwan (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1142/S2010007821500032

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