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Abstract
I compile seven million residential real estate transactions in the United Kingdom and recover discount rates used by homeowners to value dwelling sustainability. To do this, I calibrate the present value of energy savings from subsequent improvements in dwelling sustainability to the observed price premium. I show that homeowners accept lower returns for greener dwellings, evidenced by the declining structure of discount rates with increasing dwelling sustainability. Moreover, I exploit the spatial, temporal, tenurial, and vintage variation in premium to demonstrate that homeowners price sustainability following economic principles. My estimates provide direct measures for rates used to discount climate investments.
