THE AMENITY VALUE OF CLIMATE TO HOUSEHOLDS IN GERMANY

This study uses the hedonic approach to measure the amenity value of climate in Germany. Unlike in earlier research separate hedonic wage rate 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 over these areas. The evidence suggests that households in Germany 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 labor this is consistent with what theory would predict. Overall households regard higher January temperatures as an amenity but higher July temperatures as a disamenity.