Willingness to Pay for Green Infrastructure in Residential Development—A Consumer Perspective

Abstract

This paper investigates the literature and theoretical underpinning of the concept of "willingness to pay" (WTP) for green infrastructure (GI) with consequences for residential development. The benefits of GI in urban settlements include improved air quality, attenuation of the urban heat island, thermal insulation and lower energy bills for green roofs and walls, the creation of social amenity space, a habitat for biodiversity, and stormwater water attenuation. Collectively, these benefits are termed eco-system services and enhance sustainability. The role of GI, the "lungs of the planet", is heavily correlated to atmospheric conditions; high levels of GI improve air quality, which is acknowledged widely with many cities increasing GI to make them more resilient to future predicted challenges with respect to heat and poor air quality. In addition, there is evidence that the biophilia effect enhances human well-being. There are some studies claiming that purchasers pay a premium for property with good GI. However, there is little research about the process in consumers' minds leading to such a premium-if, how, when (under what circumstances), and then to what extent are consumers willing to pay for GI. This process, if better understood, may enable sellers or policy makers to influence the amounts of GI in developments, thus making it possible to enhance the value of GI to buyers. There is some research pointing to factors to be considered when modeling such processes. For developers, knowing the optimum amount of GI would enable them to design and construct developments with maximum purchaser appeal. To do this, stakeholders need to predict the level of WTP amongst potential purchasers for which they need to understand the decision processes behind WTP. In this way, sustainability in residential property development could be optimized. The paper analyzes the literature and theories concerning WTP, focusing on dwellings and GI. Our findings are that some quantitative evidence exists that purchasers pay more for residential property with high levels of GI in some cities, but they do so without any understanding of the possible decision processes leading to those premiums (if, how, when, and then to what extent). The paper proposes a comprehensive conceptual model that may explain buyers' WTP for a dwelling based on a presumed cost-benefit analysis performed by buyers, which has been extended here to include GI and psychological factors. Thus, the paper has a consumer perspective. The model may be used to select variables and test them in empirical studies, and by integrating with other factors in the model, it can attain a more comprehensive understanding of WTP for GI in residential development.

Green spaces in housing development – buyers’ preferences

“…The interest to purchase a dwelling increased with the level of greenery in the courtyard. Considering that interest and attractiveness matter significantly in the buyer's psychological cost-benefit analysis, it can be concluded that green spaces may influence willingness to pay price for a dwelling [32]. If the greenness of the courtyard increases attractivity and interest of a buyer, the apartment attracts a greater number of potential buyers (bidders).…”

“…Buyers' present and future needs and preferences are fundamental in purchase evaluation and psychological cost-benefit analysis, therefore priority and significance that green space have for individual and positioning among those needs will play role in output of customer evaluation [32].…”

Re-Connecting Children to Nature in Cities: The Role of Urban Green Infrastructure Smouha Neighborhood, Alexandria, Egypt Case.

“…-enhances the role and importance of blue infrastructures in green infrastructure planning. ■ Applicability [45] -must be considered in addition to adaptability and implementation, -being realistic, is the guarantee of its implementation and development. ■ Governance [40], [41], [46] -a collaboration between the government actors and the citizens in the planning processes as a guarantee for project success.…”

Spatial Inequality in China’s Housing Market and the Driving Mechanism

“…We assume in the construction of the indicator system that GDP and GDP per capita represent the stage of regional economic development [96,97], fiscal balance and loans reflect the potential and strength of government support for housing market development [98], population and urbanization represent the potential scale of housing demand [99], residents' income and consumption level reflect the ability and willingness to consume housing, the secondary industry represents the real economy [100], the tertiary industry and finance reflect the support capacity of intermediary services, import and export represent the development level of the open economy [101], health facilities and public transport conditions reflect the capacity and quality of infrastructure services [102], and the green land area and the number of parks reflect the quality of the ecological environment [103]. The analysis of independent and dependent variables based on the Geodetector method helps reveal the connections between the spatial inequality in the housing market and the stage of economic development, government support or policy orientation, urbanization, industrialization, globalization, infrastructure and public services, and environmental quality, and it provides the basis for policy design.…”