Do People Value Environmental Goods? Evidence From the Dutch Housing Market

Abstract

This article studies the relationship between environmental goods and housing prices in the Netherlands. Applying a hedonic pricing model, we estimate simultaneous correlations between housing prices and air quality, noise pollution, green scenery, and water scenery, demonstrating the importance of including related sets of environmental goods to avoid omitted variable bias. We find that households particularly value noise pollution and green and water amenities in close proximity to their house. Air quality does not appear to substantially impact housing prices, neither do green spaces located more than 200 meters away. These results suggests that households mainly value those environmental goods that are directly experienced. A comparison of our hedonic price results to existing monetary estimates of the health effects of environmental goods indicates that people only partially internalize these health effects.