Sunday, December 18, 2016

Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain

Shale gas has grown to become a major new source of energy in countries around the globe. While its importance for energy supply is well recognized, there has also been public concern over potential risks such as damage to buildings and contamination of water supplies caused by geological disturbance from the hydraulic fracturing (‘fracking’) extraction process. Although commercial development has not yet taken place in the UK, licenses for drilling were issued in 2008 implying potential future development. This paper examines whether public fears about fracking are evident in changes in house prices in areas that have been licensed for shale gas exploration. Our estimates suggest differentiated effects. Licensing did not affect house prices but fracking the first well in 2011, which caused two minor earthquakes, did. We find a 2.7-4.1 percent house price decrease in the area where the earthquakes occurred. Robustness checks confirm our findings.

by Steve Gibbons, Stephan Heblich, Esther Lho and Christopher Timmins
National Bureau of Economic Research (NBER)
NBER Working Paper No. 22859l Issued in November 2016

Planning for green infrastructure: The spatial effects of parks, forests, and fields on Helsinki's apartment prices

• Spatial effects of forests, parks, and fields on apartment prices are estimated.
• Forests generate indirect benefits in the urban core and direct in the urban fringe.
• Parks generate direct and indirect benefits in the urban core.
• Fields generate direct benefits in the urban fringe and no indirect spillovers.
• Successful green interventions are location-, benefit-, and goal-sensitive.

As the importance of urban green spaces is increasingly recognised, so does the need for their systematic placement in a broader array of socioeconomic objectives. From an urban planning and economics perspective, this represents a spatial task: if more land is allocated to various types of green, how do the economic effects propagate throughout urban space? This paper focuses on the spatial marginal effects of forests, parks, and fields and estimates spatial hedonic models on a sample of apartment transactions in Helsinki, Finland. The results indicate that the capitalization of urban green in apartment prices depends on the type of green, but also interacts with distance to the city centre. Additionally, the effects contain variable pure and spatial spillover impacts, also conditional on type and location, the separation of which highlights aspects not commonly accounted for. The planning of green infrastructure will therefore benefit from parameterizing interventions according to location, green type, and character of spatial impacts.
The full-sample estimation explained 78% of price variation and returned the expected signs for all hedonic coefficients, except for that of distance to a forest. An increase in the debt and maintenance costs and a decrease in the condition of the property decreases price/m2. Additional rooms have a negative effect, reflecting the diminishing marginal utility of additional units of space. Increase in the property's age decreases price until historical status becomes relevant and price increases again. The yearly dummy variables are significant, indicating a drop in the average level of selling price/m2 from 2000 to 2001, followed by an increase from 2002 onwards. Increased distance to the city centre and coastline decrease price, whereas lot size is not significantly different from zero. The coefficients of the proxies for noise and air pollution disamenities are significant; a 100-meter increase in distance to rails increases average m2 price by 0.15%, while the corresponding increase for over-ground metro line is 0.19% and for major road is 0.36%.
Kuva: Roy Koto/ Viherosasto

The estimation supported the assumption of a CBD gradient in the marginal effects of parks and fields. Increased distance to a park decreases prices in the city centre, or, conversely decreasing the distance of a downtown property to a park increases its price, with the effect gradually declining as distance to the CBD increases. The maximum effect is estimated to a decrease of 1.5% in the m2 price when distance to a park increases 100 m, which is in the same range to the effect of recreational forests in the study of Tyrväinen (1997) that reports a corresponding increase of 0.5% (after currency conversion and average price normalization).... Increased distance to fields decreases price in the urban fringe, or conversely, decreasing the distance of a suburban property to fields increases its price. The maximum effect along this gradient is a decrease of 1.1% in m2 price when distance to a field increases by 100 m.

Going to the Woods Is Going Home: Recreational Benefits of a Larger Urban Forest Site — A Travel Cost Analysis for Berlin, Germany

• The travel cost method (TCM) is applied to an urban forest site in Berlin, Germany.
• The study strongly suggests the feasibility of the TCM for urban forest sites.
• Recreational demand is less elastic for Berlin residents than for non-residents.
• Online survey participants show a more elastic demand than those sampled on-site.
• An overall consumer surplus of 14.95 € per visit is estimated for the whole sample.

We present an application of the travel cost method to a large urban forest site in Berlin, Germany. The analysis is based on a large onsite survey and the same survey administered online. Although such applications are rare in an urban context, applying a seasonal demand model to the case of Grunewald is possible because the distances travelled are relatively large, the majority of the respondents use motorized or public transport, and Grunewald is a large and unique urban forest site with very few substitutes. The main results are the following: (1) The demand for visits to Grunewald is less elastic if only Berlin residents are taken into account compared to when residents from the entire larger urban area of Berlin are considered. (2) Estimated consumer surpluses are therefore greater if only Berlin residents are taken into consideration. (3) In addition, demand is more elastic for the internet sample than for the on-site sample. (4) Results suggest a lower bound overall consumer surplus of 14.95 € per visit. The results indicate that despite its inherent limitations, non-market economic valuation through the travel cost method can provide administrations with a powerful tool to monetize the benefits of urban forest recreation to increase public funding and redirect resources to address intensified use....

Saturday, December 17, 2016

A Global Survey and Review of the Determinants of Transaction Costs of Forestry Carbon Projects

• We measured transaction costs incurred by project developers of forestry carbon in monetary and non-monetary terms.
• We tested if the transaction costs depend on characteristics of the transaction, transactor, and institutional design.
• TCs are found to be significantly influenced by various factors, especially market type.
• CDM-market-related projects face significantly higher TCs than non-CDM-related projects.

Reducing carbon emissions in the forestry sector by means of market-based schemes is considered a cost-effective measure for tackling climate change impacts. However, the transaction costs (TCs) involved are typically unknown or unquantified and therefore often neglected. In this study three types of TCs (search, design and negotiation costs) were measured in person-days and monetary terms based on a global survey of forestry carbon projects implemented across Latin-America, Asia and Africa. Cost estimates vary between zero and 1.201/tCO2 for person-days and from zero to US$ 1.738/tCO2 for monetary costs. Key drivers of TCs are identified based on the characteristics of the project in general, the transaction, the transactors involved and institutional design. The latter type of characteristic is shown to have a particularly large impact on TCs.

by Thu-Ha Dang Phan 1 and 2, Roy Brouwer 2 and Marc David Davidson 1 
1. Institute for Biodiversity and Ecosystem Dynamics, University of Amsterdam, P.O. Box 94248, 1090 GE Amsterdam, The Netherlands
2. Department of Economics, University of Waterloo 200 University Avenue West, Waterloo, ON, N2L 3G1, Canada
Ecological Economics via Elsevier Science Direct
Volume 133; March, 2017; Pages 1–10
Available online 24 November 2016
Keywords: Transaction costs; Institutional design; Forestry carbon; REDD; CDM; Carbon market

Thursday, December 15, 2016

Energy efficiency and economic value in affordable housing

• Dutch affordable housing suppliers recoup sustainability investment by selling dwellings.
• Energy-efficient affordable dwellings sell at a premium.
• A-labeled dwellings are 6.3% – 9,300 euros – more valuable than C-labeled ones.
• The combined value effect of refurbishing an affordable housing dwelling, including improving the energy efficiency, of 20% would more than pay for the retrofit.

Strong rental protection in the affordable housing market often prohibits landlords from charging rental premiums for energy-efficient dwellings. This may impede (re)development of energy efficient affordable housing. In the Netherlands, affordable housing institutions regularly sell dwellings from their housing stock to individual households. If they can sell energy efficient dwellings at a premium, this may stimulate investments in the environmental performance of homes.

We analyze the value effects of energy efficiency in the affordable housing market, by using a sample of 17,835 homes sold by Dutch affordable housing institutions in the period between 2008 and 2013. We use Energy Performance Certificates to determine the value of energy efficiency in these transactions. We document that dwellings with high energy efficiency sell for 2.0–6.3% more compared to otherwise similar dwellings with low energy efficiency. This implies a premium of some EUR 3,000 to EUR 9,700 for highly energy efficient affordable housing.
by Andrea Chegut 1, Piet Eichholtz 2 and Rogier Holtermans 2 
1. MIT, Cambridge, MA, United States
2. Maastricht University, Department of Finance, PO Box 616, 6200 MD Maastricht, The NetherlandsThe Netherlands
Volume 97, October 2016, Pages 39–49
Keywords: Affordable housing; Energy efficiency; Energy performance certificates
A free version of the paper is currently available free of charge via the MIT Centre for Real Estate at

Thursday, December 1, 2016

New Association of Environmental and Resource Economists (AERE) Website

The new AERE website at offers up-to-date information about conferences, job opportunities, and all AERE news, as well as improved functionality! 

The site will be your portal for: 
  • Access to every issue of JAERE and REEP and the AERE Newsletter;
  • Registration for AERE events;
  • Abstract submission for the AERE Summer Conference;
  • Abstract submission for the five regional and national meetings at which AERE sponsors sessions each year;
  • Announcements for conferences and jobs; and
  • Information on how to nominate someone for AERE honors and awards.

The site will enable all in the organization to communicate more efficiently and seamlessly about opportunities in environmental and natural resource economics.  Tthe online payment system will make membership payment and registering for events much easier

Click here for the newly designed website's homepage.

Upcoming AERE events include:
  • AERE sessions and luncheon at the 2017 ASSA meeting in Chicago. Steve Polasky of the University of Minnesota will be giving the AERE Fellows Talk at the luncheon on January 7th. Reservation deadline is December 21st
  • The AERE Summer Conference in Pittsburgh, Pennsylvania (May 31-June 2, 2017). The Call for Papers will open on December 1st and close on January 18, 2017;
  • AERE sessions at a variety of national and regional meetings.
See the November AERE Newsletter for details on all these events.