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The Amenity Value of English Nature: A Hedonic Price Approach

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Abstract

Using a hedonic property price approach, we estimate the amenity value associated with proximity to habitats, designated areas, domestic gardens and other natural amenities in England. There is a long tradition of studies looking at the effect of environmental amenities and disamenities on property prices. But, to our knowledge, this is the first nationwide study of the value of proximity to a large number of natural amenities in England. We analysed 1 million housing transactions over 1996–2008 and considered a large number of environmental characteristics. Results reveal that the effects of many of these environmental variables are highly statistically significant, and are quite large in economic magnitude. Gardens, green space and areas of water within the census ward all attract a considerable positive price premium. There is also a strong positive effect from freshwater and flood plain locations, broadleaved woodland, coniferous woodland and enclosed farmland. Increasing distance to natural amenities such as rivers, National Parks and National Trust sites is unambiguously associated with a fall in house prices. Our preferred regression specifications control for unobserved labour market and other geographical factors using Travel to Work Area fixed effects, and the estimates are fairly insensitive to changes in specification and sample. This provides some reassurance that the hedonic price results provide a useful representation of the values attached to proximity to environmental amenities in England. Overall, we conclude that the housing market in England reveals substantial amenity value attached to a number of habitats, designations, private gardens and local environmental amenities.

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Notes

  1. It should be noted that our dataset includes distance to all (916) National Trust properties. Although the overwhelming majority of these properties contain (or are near) picturesque or important natural environmental amenities, some also contain houses and other built features. For example, NT’s most visited property Wakehurst Place, the country estate of the Royal Botanic Gardens (Kew), features not only 188 hectares of ornamental gardens, temperate woodlands and lakes but also an Elizabethan Mansion and Kew’s Millennium Seed Bank. Hence, the amenity value captured by the ‘distance to land owned by the National Trust’ variable reflects also some elements of built heritage that are impossible to disentangle from surrounding natural features.

  2. In principle, consumer prices are a factor too, but local data on prices is unavailable and goods prices are unlikely to vary within TTWAs.

  3. There is a large body of work investigating different functional forms for the hedonic price equation. Of note, more recently, several authors have also explored semiparametric and nonparametric specifications (e.g. Bontemps et al. 2008; Parmeter and Henderson 2007).

  4. Standard errors are clustered at the Travel to Work Area level to allow for heteroscedasticity and spatial and temporal correlation in the error structure within TTWAs.

  5. The ward-based water shares and 1km square freshwater, wetlands and floodplains shares are weakly correlated with each other which suggests they are measuring different water cover.

  6. From the coefficients, the derivative of prices with respect to school quality is obtained as 0.022–0.20 \(\times \) distance (in km).

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Acknowledgments

This research was carried out as part of the UK National Ecosystem Assessment (http://uknea.unep-wcmc.org/). Financial support from UNEP-World Conservation Monitoring Centre (UNEP-WCMC) is gratefully acknowledged. We would like to thank Ian Bateman, Carlo Fezzi and David Maddison for insightful comments on earlier versions of the paper. We are also grateful to Claire Brown and Megan Tierney from UNEP-WCMC for help in sourcing some of the data used. The authors are responsible for any errors or omissions.

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  1. Department of Geography and Environment, London School of Economics and Political Science, Houghton Street, London, WC2A 2AE, UK

    Stephen Gibbons, Susana Mourato & Guilherme M. Resende

  2. Grantham Research Institute on Climate Change and the Environment, London School of Economics and Political Science, London, UK

    Susana Mourato

  3. Institute for Applied Economic Research/Government of Brazil (IPEA), Brasília, Brazil

    Guilherme M. Resende

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  1. Stephen Gibbons
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Correspondence to Susana Mourato.

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Gibbons, S., Mourato, S. & Resende, G.M. The Amenity Value of English Nature: A Hedonic Price Approach. Environ Resource Econ 57, 175–196 (2014). https://doi.org/10.1007/s10640-013-9664-9

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