Abstract
Agricultural activities jointly generate various externalities. Hedonic pricing method allows for their valuation. Previous hedonic studies have estimated the value of the externalities generated by a given agricultural activity in a single parameter. Based on simple theoretical model, we illustrate that this parameter captures the sum of the different externalities generated by the activity. Using insights from papers highlighting a distance-decay in the willingness-to-pay, explain that this parameter can differ at different spatial scales. Using specific spatial econometric model with spatial lags on the explanatory variables, we distinguish between the value of infra-municipal agricultural externalities (called direct effects) and the value of extra-municipal agricultural externalities with larger spatial range (called spillover effects) arising from the same agricultural source. Among the estimated models, the spatial lag of the exogenous variable and the general nested spatial models are selected as the best models. We find that swine activities present negative effects at all scales whereas dairy cattle activities, including grassland management, present negative direct effects but positive local spillovers.
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