Who demands peri-urban nature? A second stage hedonic house price estimation of household’s preference for peri-urban nature

Abstract We analyze housing markets in a suburb north of the Danish capital Copenhagen. There the concentration of affluent households decreases rapidly with distance to nature. This indicates systematic differences in preferences that are highly correlated with demographics. We assess if and to what extent this is the case by conducting a second-stage hedonic house price study, where we recover household-specific preferences for the availability of peri-urban nature. Preference parameters are identified locally through restrictions on household utility functions. We assess the relationship between demographic factors and household Willingness To Pay for nature availability across the Willingness To Pay distribution. The results of the analysis show that households paid on average 968 EUR per year for the level of peri-urban nature they have available from their home. In extreme cases, some households paid more than seven times the average amount. Willingness To Pay for peri-urban nature increases with income and wealth across the entire population. However, an increase in income will increase Willingness To Pay more for households at the lower end of the willingness to pay distribution, compared to the effect at the high end of the Willingness To Pay distribution. Furthermore, increases in education levels are related to higher willingness to pay in the middle of the willingness to pay distribution, whereas further education has less impact on households with high willingness to pay. Single parent status, car ownership, and other factors also affect Willingness To Pay for nature availability. Our study contributes to the discussion of the distributional aspects of environmental policies with results based on a revealed-preference method where households face a real and binding budget constraint. Our results show that the socio-economic distribution of changes in amenity values is a relevant factor to consider when evaluating policies that affect the provision of nature close to urban areas.