The Value of Climate Amenities: Evidence from US Migration Decisions
We value climate amenities by estimating a discrete location choice model for households that changed metropolitan statistical areas (MSAs) between 1995 and 2000. The utility of each MSA depends on location-specific amenities, earnings opportunities, housing costs, and the cost of moving to the MSA from the household's 1995 location. We use the estimated trade-off between wages and climate amenities to value changes in mean winter and summer temperatures. At median temperatures for 1970 to 2000, a 1°F increase in winter temperature is worth less than a 1° decrease in summer temperature; however, the reverse is true at winter temperatures below 25°F. These results imply an average welfare loss of 2.7 percent of household income in 2020 to 2050 under the B1 (climate-friendly) scenario from the special report on emissions scenarios (Intergovernmental Panel on Climate Change 2000), although some cities in the Northeast and Midwest benefit. Under the A2 (more extreme) scenario, households in 25 of 26 cities suffer an average welfare loss equal to 5 percent of income.
We would like to thank the U.S. Environmental Protection Agency, Resources for the Future, and RTI International for funding and Wolfram Schlenker for generously providing data from the Hadley III model. We would like to thank Sara Casey and Martha Caulkins for excellent research assistance and Jamie Cajka and Kibri Everett for providing GIS support. We would also like to thank participants at seminars at the Camp Resources, National Center for Environmental Economics, Resources for the Future, Columbia University, the Annual Social Sciences Association meetings, and the Third World Congress of Environmental and Resource Economists. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
All disclosure are contained in the acknowledgments.
Paramita Sinha & M Cropper, 2009. "The value of climate amenities: Evidence from migration decisions," IOP Conference Series: Earth and Environmental Science, vol 6(32).