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.

To study the impact of green-transition regulation on firm value, we analyze stock returns around legislator tweets about climate change. Green stocks significantly outperform brown stocks in the one-to-ten-minute window around pro-transition tweets. The cumulative daily-average green-minus-brown portfolio return around pro-transition tweets is 6.9% higher than around anti-transition ones. For tweets that mention environmental regulations, the spread increases in the weeks before a congressional vote and is stronger before close votes and when Congress is split. Our findings suggest that the green transition impacts the relative performance of green and brown stocks, at least partly, via a regulatory channel.