Speaker
Description
The contribution of urban nature to human well-being is well documented, providing benefits such as improved air quality, increased physical activity, enhanced social cohesion, stress reduction and diverse recreational opportunities. These green areas play a crucial role in promoting physical activity and facilitating social interactions. The economic valuation of these natural amenities is essential for environmental and development policy makers. For example, cost-benefit analysis has been used to guide environmental decision making.
The life satisfaction approach provides a framework for assessing the relationship between environmental conditions and life satisfaction (LS), as well as the interplay between LS and income. By analysing these relationships, the approach estimates the implicit willingness to pay (WTP) for environmental goods, which is determined by the amount of income required to compensate for changes in environmental quality while keeping LS constant. Thus, an accurate measurement of the income effect on LS is crucial, as it significantly affects the estimated WTP. Using survey data (N=1400) from 22 large German cities, this study compares WTP values for urban green and biodiversity derived from conventional income measures (monthly net income) with those derived from an exogenous income shock resulting from the COVID-19 pandemic.
Our results indicate positive WTP values for urban nature in both specifications. However, while conventional methods may lead to inflated WTP estimates, the exogenous income shock approach may provide a more realistic valuation of urban green.
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