The Amenity Value of Climate to German Households

27 Pages Posted: 24 May 2004

See all articles by Katrin Rehdanz

Katrin Rehdanz

University of Kiel; University of Hamburg - Centre for Marine and Climate Research (ZMK); Kiel Institute for the World Economy

David J. Maddison

University College London - Department of Economics

Date Written: March 2004

Abstract

This study uses the hedonic approach to measure the amenity value of climate in Germany. Unlike in earlier research separate hedonic wage and house price regressions are estimated for relatively small geographic areas and formal tests undertaken to determine whether the coefficients describing the impact of climate variables are homogenous across these areas. Evidence suggests that German households are compensated for climate amenities mainly through hedonic housing markets. Given that climate is largely unproductive to industry and few industries spend more on land than labour this is consistent with what theory would predict. Throughout Germany house prices are higher in areas with higher January temperatures, lower July temperatures and lower January precipitation. In East Germany wages are higher in areas with higher January precipitation. The full implicit price of climate variables however is very uncertain.

Keywords: Climate change, Germany, Hedonic pricing

JEL Classification: Q29, R29

Suggested Citation

Rehdanz, Katrin and Maddison, David J., The Amenity Value of Climate to German Households (March 2004). FEEM Working Paper No. 57.04. Available at SSRN: https://ssrn.com/abstract=541109 or http://dx.doi.org/10.2139/ssrn.541109

Katrin Rehdanz (Contact Author)

University of Kiel ( email )

Olshausenstr. 40
D-24118 Kiel, Schleswig-Holstein 24118
Germany

University of Hamburg - Centre for Marine and Climate Research (ZMK) ( email )

Troplowitzstrasse 7
D-22529 Hamburg
Germany

Kiel Institute for the World Economy ( email )

P.O. Box 4309
Kiel, D-24100
Germany

David J. Maddison

University College London - Department of Economics ( email )

Gower Street
London WC1E 6BT, WC1E 6BT
United Kingdom

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