Migration Responses to a Loss in Regional Amenities: An Analysis with a Multiregional CGE Model

Abstract

Amenities, both natural and urban, have long been considered to be a major factor in the choice of regional location by households. In this chapter, we examine demographic and economic effects of a relative decline in a region’s amenities, where ‘amenities’ are taken to mean any features of a region outside purely economic ones. We have in mind such amenity changes as a heightened perception of pollution or an apparent change in regional weather patterns, possibly emanating from anthropogenic climate change. With regard to the latter, we imagine a change that makes a region’s climate more uncomfortable without (at least for the period under consideration) having any effects on production functions. Our method of analysis is a dynamic multiregional computable general equilibrium (CGE) model with lagged (imperfect) migration responses. Each region’s residents change their pattern of net interregional migration in response to relative changes in expected regional income and amenities. We undertake a simulation to explore the time path of adjustment in migration and regional economic variables in response to an amenity shock. A key component of the chapter is a careful interpretation of results, disentangling the effects resulting from the various mechanisms which link regions.