Some Like it (Less) Hot: Extracting Tradeoff Measures for Physically Coupled Amenities

H. Allen Klaiber, Joshua Abbott, V. Kerry Smith

NBER Working Paper No. 21051
Issued in March 2015
NBER Program(s):Environment and Energy Economics

The Urban Heat Island (UHI) provides direct evidence of how human activities contribute to a feedback loop that can result in multiple changes in ecosystem services by creating localized warming as well as differences in vegetated landscapes in areas surrounding the urban core. This paper develops a new spatial-temporal panel estimator to recover consistent estimates of household 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. The framework adapts the earlier Abbott Klaiber [2011] proposal to overcome challenges associated with the varying spatial scales of capitalization of landscape and temperature variables and the likelihood of spatially and temporally varying 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 $56 monthly.

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Document Object Identifier (DOI): 10.3386/w21051

Published: H. Allen Klaiber & Joshua K. Abbott & V. Kerry Smith, 2017. "Some Like It (Less) Hot: Extracting Trade-Off Measures for Physically Coupled Amenities," Journal of the Association of Environmental and Resource Economists, vol 4(4), pages 1053-1079.

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