The Value of Nature in Residential Environments: A National Order of Magnitude

32 Pages Posted: 4 Dec 2022

See all articles by Michiel N. Daams

Michiel N. Daams

University of Groningen

Linda A. de Jongh

Statistics Netherlands

Frans J. Sijtsma

University of Groningen

Patrick W. Bogaart

Statistics Netherlands

Date Written: November 13, 2022

Abstract

This paper presents a valuation of nature based on its contribution to one of the largest components of national wealth, namely housing capital. Housing values are used to estimate, in aggregate terms, the monetary value of nature’s ecosystem services that are close to common-day human experience and living environments. More precisely, we assess data that cover the complete stock of single-family houses in an entire country (N = 4.5 million), in this case the Netherlands. An established hedonic valuation model is enhanced to distinguish between ‘attractive’ and ‘common’ nature to capture experiential quality differences. Our results suggest that the national benefits from living close to nature amount to 2.9% of housing’s total value or EUR 32.7 billion. This estimate underpins a serious order of magnitude of what in financial terms could be considered as akin to a ‘market capitalization’ of nature. Relevantly, three-quarters of nature’s capitalized value traces back to only one-fifth of total natural land cover, which consists of relatively attractive nature. Our findings may inform discussions on synergy between conservation and residential planning as well as discussions regarding emerging systems of natural capital accounting and how these could capture benefits from ecosystem services more completely in monetary terms.

Keywords: Hedonic Valuation, Housing Market, Nature, Conservation Policy, Natural Capital Accounting

JEL Classification: H41, Q51, Q56

Suggested Citation

Daams, Michiel N. and de Jongh, Linda A. and Sijtsma, Frans J. and Bogaart, Patrick W., The Value of Nature in Residential Environments: A National Order of Magnitude (November 13, 2022). Available at SSRN: https://ssrn.com/abstract=4275816 or http://dx.doi.org/10.2139/ssrn.4275816

Michiel N. Daams (Contact Author)

University of Groningen ( email )

Landleven 1
Groningen, 9747 AD
Netherlands

Linda A. De Jongh

Statistics Netherlands

Frans J. Sijtsma

University of Groningen

Patrick W. Bogaart

Statistics Netherlands

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