Preserve scenic beauty or promote tourism? A house price perspective

The amenity value of scenic beauty and high environmental quality of landscapes appears evident from intuition. However, isolating the willingness to pay for these qualities reliably is challenging as many pristine locations are by definition relatively remote and lacking in the economic and physical infrastructure that underpins high land values. Environmental attractiveness of a region can be hypothesised to raise house prices, offsetting at least partially any detrimental price effects stemming from their relative remoteness. Using a dataset of residential sale prices from 2013 through 2020 and a multi-dimensional measure of scenic beauty as well as various indicators of tourism intensity, we seek to test if this amenity value is indeed captured in house prices in Germany controlling for a large number of possible confounders. The hedonic and semiparametric spline analyses confirm that tourist destinations and locations of extraordinary scenic beauty command a price premium.