The amenity value of the British climate
This study explores the amenity value of climate to households in Britain. We employ the hedonic technique and use household panel data to derive the marginal willingness to pay for small changes in climate variables. We analyse both the housing and the labour market. Climate is described in terms of heating, cooling degree and rain days. Evidence suggests that it is the housing market that mainly compensates for climate amenities. According to the results, the relationship between property prices and climate has an inverted u-shape. For the sample, about 50 per cent of the locations are close to the preferred levels of heating and cooling degree days while the results for rain days are more varied. Connecting the results to projections of climate change leads to the conclusion that future developments are likely to move a number of households further away from their preferred climate, thus leading to larger regional disparities.