Scandinavian Working Papers in Economics

Working Papers,
Swedish National Road & Transport Research Institute (VTI)

No 2010:6: Willingness to pay for sustainable housing

Svante Mandell () and Mats Wilhelmsson
Additional contact information
Svante Mandell: vti – Swedish National Road and Transport Research Institute, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Mats Wilhelmsson: b) Center for Banking and Finance, Royal Institute of Technology, KTH

Abstract: Over the last decades there has been an increasing focus on how to build a sustainable society and in particular on how to design policies that pushes the society into a more sustainable direction. The present paper aims at analysing differences between house buyers when valuing environmental characteristics associated with the house as such. The theoretical framework used is based on the hedonic modelling, but we are also estimating the second stage by assuming a translog utility function. In doing that we are able to estimate the non-marginal willingness to pay for environmental housing attributes and whether environmental aware household have a higher willingness to pay or not. The conclusion to be drawn from the analysis is that there is a positive willingness to pay for environmental attributes. Hence, there may be room for policy measures such as information campaigns. However, it seems to be more effective concerning environmental housing attribute that do not require large investment.

Keywords: Sustainability; housing; willingness to pay

JEL-codes: Q58; R21

19 pages, July 5, 2010

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