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Willingness to pay for sustainable housing

Author

Listed:
  • Mandell, Svante

    (vti – Swedish National Road and Transport Research Institute)

  • Wilhelmsson, Mats

    (b) Center for Banking and Finance, Royal Institute of Technology, KTH)

Abstract

Over the last decades there has been an increasing focus on how to build a sustainable society and in particular on how to design policies that pushes the society into a more sustainable direction. The present paper aims at analysing differences between house buyers when valuing environmental characteristics associated with the house as such. The theoretical framework used is based on the hedonic modelling, but we are also estimating the second stage by assuming a translog utility function. In doing that we are able to estimate the non-marginal willingness to pay for environmental housing attributes and whether environmental aware household have a higher willingness to pay or not. The conclusion to be drawn from the analysis is that there is a positive willingness to pay for environmental attributes. Hence, there may be room for policy measures such as information campaigns. However, it seems to be more effective concerning environmental housing attribute that do not require large investment.

Suggested Citation

  • Mandell, Svante & Wilhelmsson, Mats, 2010. "Willingness to pay for sustainable housing," Working Papers 2010:6, Swedish National Road & Transport Research Institute (VTI).
    • Handle: RePEc:hhs:vtiwps:2010_006
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    File URL: http://www.transportportal.se/SWoPEc/WTP_sustainable_attrib_WP.pdf
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    Cited by:

    1. Carolin Pommeranz & Bertram Ingolf Steininger, 2018. "Willingness or Market Power: What Induces Tenants to Pay for Energy Efficient Housing?," ERES eres2018_134, European Real Estate Society (ERES).
    2. Pride, Dominique & Little, Joseph & Mueller-Stoffels, Marc, 2018. "The value of residential energy efficiency in interior Alaska: A hedonic pricing analysis," Energy Policy, Elsevier, vol. 123(C), pages 450-460.
    3. Gjestland, Arnstein & McArthur, David Philip & Osland, Liv & Thorsen, Inge, 2014. "The suitability of hedonic models for cost-benefit analysis: Evidence from commuting flows," Transportation Research Part A: Policy and Practice, Elsevier, vol. 61(C), pages 136-151.
    4. Liao, Wen-Chi & Zhao, Daxuan, 2019. "The selection and quantile treatment effects on the economic returns of green buildings," Regional Science and Urban Economics, Elsevier, vol. 74(C), pages 38-48.
    5. Carolin Pommeranz & Bertram I. Steininger, 2021. "What Drives the Premium for Energy-Efficient Apartments – Green Awareness or Purchasing Power?," The Journal of Real Estate Finance and Economics, Springer, vol. 62(2), pages 220-241, February.
    6. Hårsman, Björn & Daghbashyan, Zara & Chaudhary, Parth, 2016. "On the Quality and Impact of Residential Energy Performance Certificates," Working Paper Series in Economics and Institutions of Innovation 429, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    7. Thorsnes, Paul & Bishop, Tim, 2013. "The value of basic building code insulation," Energy Economics, Elsevier, vol. 37(C), pages 68-81.

    More about this item

    Keywords

    Sustainability; housing; willingness to pay;
    All these keywords.

    JEL classification:

    • Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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