Template-Type: ReDIF-Paper 1.0
Author-Name: David Fleming
Author-X-Name-First: David
Author-X-Name-Last: Fleming
Author-Email: david.fleming@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Arthur Grimes
Author-X-Name-First: Arthur
Author-X-Name-Last: Grimes
Author-Email: arthur.grimes@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Laurent Lebreton
Author-X-Name-First: Laurent
Author-X-Name-Last: Lebreton
Author-Email: laurent@themodellinghouse.nz
Author-Workplace-Name: The Modelling House
Author-Name: David C Maré
Author-X-Name-First: David C
Author-X-Name-Last: Maré
Author-Email: dave.mare@motu.org.nz
Author-Workplace-Name: Motu Economic and Public Policy Research
Author-Name: Peter Nunns
Author-X-Name-First: Peter
Author-X-Name-Last: Nunns
Author-Email: pnunns@mrcagney.com
Author-Workplace-Name: MRCagney
Title: Valuing Sunshine
Abstract: Sunlight influences people’s real estate decisions, but city intensification may reduce sunlight exposure for neighbouring properties, causing a negative externality. There are hitherto no rigorous estimates of the cost of this externality. Using over 5,000 observations on house sales in Wellington, New Zealand, we derive the willingness to pay for an extra daily hour of sun, on average, across the year. After controlling for locational sorting and other considerations in an hedonic regression, we find that each extra daily hour of sunlight exposure is associated with a 2.4% increase in house sale price. This estimate is robust to a variety of alternative specifications. Our results can be used to price negative externalities caused by new development, so replacing inflexible regulations designed to address impacts of development on neighbours’ sunshine.
Length: 23 pages
Creation-Date: 2017-06
File-URL: https://motu-www.motu.org.nz/wpapers/17_13.pdf
Number: 17_13
Classification-JEL: R30, R31, N50
Keywords: Sunlight, house prices, hedonic model, views, elevation
Handle: RePEc:mtu:wpaper:17_13